Marathon, Peabody and the airlines

This past week the state received the bad news that Marathon Oil Company, formerly Ohio Oil Company, which was once headquartered in Casper Wyoming and then later in Cody Wyoming, and which has had a presence in the state since 1914, is attempting to sell its Wyoming assets.  At least psychologically, and indeed in reality, it's quite a blow to the state.

 The Ohio Oil Company Building in Casper.

The Ohio Oil Company built a major art deco building that it used as its headquarters from 1925 until 1974, when it built a new headquarters in Cody.  The building remains there today as a significant downtown building, with the old Marathon sign off so that the Ohio Oil Company name cast in cement above the main door is visible  The building is one of four buildings, including the ConRoy Building where I work, that were built by oil companies starting during World War One and through the 1920s and which were still standing when I started practicing law in 1990.  The other two were the Pan American Building, built by Pan American Petroleum (founded in 1916 and merged into Standard Oil in 1954) and the Sinclair Building.  The Sinclair building, which was a neat two story building that had garden level basement windows, was torn down in the 1990s, which I thought was a shame, as it was an attractive building with Greek architectural elements.  It apparently was a building that, because of its comparatively low stature, people didn't photograph much as I can't find a photo of it anywhere, and I never took one.  It's the Townsend Justice Center parking lot now.  Oh well.

 Now the Townsend Justice Center, once the Townsend Hotel, when this photograph was taken I was standing pretty much where the Sinclair Building had once been.  Given the nature of the residents of the Townsend in its long declining years, its conversion into a courthouse is either strangely ironic or oddly appropriate.

Anyhow, Marathon's Cody building was also a very nice one, although I remember there being some discontent in 1974 when they moved. That I can remember that at all, as I was eleven years old at the time, must mean that there was some real discontent about it.  Having said that, my moving to Cody they were bucking a trend and moving closer to their production.  By the 2000s, however, it had another office building in Houston Texas and some years ago it closed its Cody office and moved its headquarters operations solely to Houston.  It's sold off some of its assets in Wyoming slowly since the 2000s but it's now looking to completely divest itself of its Wyoming properties, presuming that it can sell them for a reasonable price.  It's not conducting a fire sale.

This reflects in another fashion a really long term trend that's occurred in the oil patch. At one time, there were a lot of oil company headquarters.  Indeed, there were a lot of them in Casper, which at one time had newspaper that claimed it was the "Oil Capitol of the World".  Marathon is unusual in that it moved out of Casper to smaller Cody, which was closer to its assets, but the loss of regional oil companies is pretty pronounced, if not actually complete.  Many moved to Denver starting in the 1960s.  During the bust of the 1970s those that hadn't moved tended to, and many of the Denver based companies moved to Houston.

 

The Consolidated Royalty Building, built in 1917 as the Oil Exchange Building, and which remains in use as a downtown office building.

Now Houston, followed by Tulsa, is the undoubted oil headquarters for the US.  There are still headquarters in Denver, but not as many as there once was.  Notably on that Denver has been booming during this oil bust, unlike the 1970s when it suffered a great deal just like Casper.  There have been layoffs in Denver, but Denver's economy has changed so much it just isn't suffering the way that it did in the 1970s.  Indeed, while individual and individual companies have suffered, the city itself has a robust economy.  Not so much the case for Wyoming.

Marathon's departure is sad for Wyoming.  A lot of Wyomingites who have been here for a long time have a connection with Marathon in one way or another.  One of my cousins worked for Marathon back in the 1980s and I once defended Marathon in a personal injury action.  Even with its headquarters in Houston it seemed like a Wyoming company to many of us.

 Wyoming Oil World, June 15, 1918.  This issue mentions a couple of items that have figured significantly in the news here lately. The Salt Creek field mentioned here is still in production, but it recently sold.  The Ohio Oil Company mentioned in connection with Salt Creek is Marathon, which ceased being an operator in this field long ago.

Peabody, the giant coal company, announced this past week that it will be missing payments to some of its creditors.  It's fighting off going into bankruptcy and that isn't good news.  I know a lot less about Peabody in Wyoming, and while the Peabody Coal Company hates the song, I can't hear the name without thinking of John Prine's song Paradise.  Peabody apparently was counting on Chinese coal imports to keep it afloat and now that the Chinese economy has been in trouble, that isn't working out. Added tot that, for the first time ever, more electricity will be generated in the United States using natural gas as a fuel than coal.

Following these two stories, two others came on the same topic.  A local energy industry related entity announced that it was laying off 50 of its employees.  Fifty men and women isn't enough to cause a big impact in the local economy, but it follows this occurring in a lot of other local businesses, some of which hit the news, and others which did not.  On the same day the local paper reported that Natrona County's unemployment rate is now 7.2%, quite a bit higher than the 5% average for the state, and in second position to energy  heavy Fremont County which is at 8.1%.  Keep in mind, as I pointed out the other day, that 7% reflects the local unemployment rate but not the local exodus rate, so 7% is more like 8%, or perhaps more like 10%, by the time everything is figured into it.

I thought that a sure sign that things are slowing down here is a decrease in air service I thought I was detecting, but in retrospect I think I may have been a bit fooled by a change in the electronic booking programs over the last few weeks and the increased Spring Break travel going on.  I haven't been tracking that, and I sure should have been.

Last year or the year before I did notice when Delta took out the late night flight back to Casper, which I liked.  Next month, we hear, at some point after the big Spring Break rush Delta will be canceling its early morning flight and have a mid morning one only, basically wiping out some travel to Salt Lake for us business travelers.  I had thought that  United Airlines has done the same in regards to its late night flight from Denver to Casper after not being able to book the late night one earlier this week, but it was probably just the case that I booked to late so it didn't give me the option, on my computer, of looking at the flight I couldn't book anyhow, for which I'm grateful.

Over the twenty-six years I've been practicing law my relationship with air travel has been a constantly evolving one.  I really like aircraft and I really hate flying in them.  I know that's odd, but it's quite true.  Anyhow, when I was very first practicing law local air travel was so cheap that chartering aircraft wasn't uncommon for lawyers. We'd charter a flight to Cheyenne or Evanston and convert hours of travel into just a few.  This was cheaper for our clients as we could convert hours of travel down to just a few that way, and everyone came out ahead.  But by the late 1990s that basically died and, while I've experienced a charter flight once within the last five years, that was really exceptional and it only occurred as it converted a three day trip down to one and it involved quite a few people.

 

Commercial airliners at the Natrona County International Airport.

Anyhow, one thing that also was the case that air connections to Denver, via the airlines, were so poor that if a person was going to go to Denver or Salt Lake, in the 1990s, they probably drove or, in the case of Salt Lake, flew in and stayed over.  It wasn't possible to fly in and back the same day.  On odd occasion, I'd drive to Denver and back in a day (which I don't mind doing), but more often than not any trip to Denver, either by car or plane, involved a couple of days.

Then, after oil picked up, the airlines started adding flights.  In Casper there was an early morning flight to Denver and another to Salt Lake, followed by morning flights and then even a mid morning flight.  A person could get back with a late afternoon flight, an early evening flight, or a late evening flight.

I took up taking the early morning flight down to Denver and the late evening one back.  The early morning one was always packed with oilfield workers and businessmen going to Denver.  The late night one always had spare seats.  Generally, if a person completed their work early they could get to the airport and catch the early evening one back.

Well, as noted, sometime last year, or maybe the year before, the late night back from Salt Lake was eliminated. So much for that.

Indeed, as I had to go to Denver, I was counting on the late night flight and was surprised when I went to book my flights, which I did rather late, to learn that I couldn't and it looked like it was gone.  It looked like the second flight of the morning was also gone, but I don't think it is.  I booked them anyway but regretted it when I was in Denver as it really put me in a box and I figured I was going to miss it and would end up staying over, which would have really defeated the entire purpose of my flying.  As it happened, I did get back to the airport with thirty minutes left before my flight was to take off, and it ended up being delayed as a crew member was late getting in due to her flight arriving late, and then the plane took off late anyhow as it was snowing like mad and the plane had to be de-iced. We left over an hour late.  Oh well.

 

Anyhow, the morning flight had a few oilfield people on it on their way to Houston, but I only know that as I know them. The usually assortment of men in their FRs carrying hardhats was not there.  

And now that the early morning flight to Salt Lake will soon be gone, I won't be there either.  I can't make that work out very well. Back to driving.

And back to the 1970s, in some ways.

Or maybe even further back.

This all reminds me, in fact, of a conversation between two oilfield people I heard awhile back coming into Casper. One had lived here awhile and the other was just moving in. The new person asked the old one what the town was like.  The person who had lived here longer replied that Casper basically had two populations; one from here that knew it was going to stay here and another that moved in and would be leaving when the boom ended.  The new employee made some comment about the resident population being unfriendly, to which the employee who had lived here replied "no", that wasn't true, it was just that they knew they were staying, and they knew others would be leaving.  I thought then that this was a pretty perceptive analysis.

Indeed, looking back, now that we're experiencing a crash, and so much of it seems so familiar, I'm surprised how resigned to it I myself am.  I feel like I should be more worried. After all, I have two kids not out of high school yet but who will be soon and who will be looking for jobs after college. But that's quite a ways away.

More than that, however, I know that I've lived through this entire cycle before and my parents had lived through it at least twice, maybe three times.  It's part of the economy here and, I think, it's part of the native culture.  Just like we hear about the generation that grew up in the Great Depression having had it impact their characters and personalities, the fact of living in a boom and bust economy does the same.

And we've always had it.  Wyoming was basically built on an cattle boom, but that collapsed in the late 1880s in a massive way.  That was followed by a revival of the cattle economy, and during that period Casper was founded.  In spite of being in the heart of cattle country, and indeed the town was the disembarkation point for the invaders of the Johnson County War, the town looked to oil from the very day of its founding, a pretty remarkable fact given that in the 1890s oil didn't amount to much.

 July 15, 1891 edition of Casper's first newspaper, when the town had just been founded.  While cattle dominated the local economy, a discovery of gas in an oil well located just outside of town was noted on the headlines, which was fairly typical for the paper at that time.  Asbestos, which would come to be mined in Natrona County, and Iron, which would note, also are noted.  Alcova would become a town, but the hot springs would not be developed.  Today that location is the site of a Depression era dam which serves to create a major reservoir.  Period papers are full of optimistic boosterism.

The oil industry really took off during World War One, for obvious reasons. Agriculture boomed at the same time, for the same reasons.  Casper and other regional cities took off as a result, although Casper had already seen quite a bit of oil development by that time.  And of course, following the war, there was a crash in both industries.

Oil started taking off again not all that long later, during the 1920s, as the national economy rebounded.  Agriculture not so much.  In the 1930s things went the other way as the country entered the Great Depression, but both industries picked up again during World War Two.  Since the Second World War we had at least to bust cycles in the oil industry, not including the current one.  Agriculture's fortunes have worked a bit differently, reflecting changes in the market over time. Agriculture seems to always be there in the background, which is something that perhaps the state should consider when it considers its economy.

Anyhow, we've been here before.  Perhaps we'll be here again.  The regional economy seems long established and for those who are from here, part of what we're used to.