By Jennifer Hiller DeWITT COUNTY, Texas, May 22 (Reuters) - Royalties from oil pumped on Paul Ruckman's land allowed the South Texas retiree to build a six-bedroom, seven-bathroom vacation home. He had plenty left over, and donated some of it to Helena, Texas, an 1800s ghost town that draws hundreds to historic buildings and gunfight re-enactments. The worst oil bust in decades has slashed the bounty that flowed to millions of rural Americans like Ruckman, who said his royalty checks have plummeted 70% since January.
"I imagine they're going to be dropping quite a bit more," said Ruckman, who owns the land with his brothers. The bust has erased tens of thousands of jobs in the drilling and service sectors, dried up local tax revenues and charitable largess that flowed along with crude oil to Texas, North Dakota and Oklahoma. Thanks to modern drilling technology, shale has turned the United States into the world's No. 1 energy producer, pumping as much as 13 million barrels per day (bpd) before prices crashed.
It added about a percentage point to U.S. GDP between 2010 and 2015. Shale-related jobs lifted the employment rate in Texas and North Dakota to a multiple of the national average. In DeWitt County, Texas, 80 miles (129 km) southeast of San Antonio, incomes shot up to sixth highest among the state's 254 counties at the peak of the shale boom in 2014 from 116th a decade ago, based on U.S. tax data. Shale oil fed a global glut.
OPEC and allied producers supported prices by cutting output, but this year Saudi Arabia and Russia briefly pumped more. Then fuel demand oilfield chemicals collapsed during the COVID-19 pandemic. Oil prices are about half January's level, and many shale producers have shut wells. U.S. output could fall about 2 million bpd this year and next, Bank of America has estimated. (For a graphic on how shale lifted U.S. incomes, click here: website MAILBOX MONEY Ruckman is among 12 million U.S.
mineral owners who collect "mailbox money," or payments for oil and gas extracted from their land. He declined to say how much his property drew, but residents in the heart of Texas' Eagle Ford shale got bigger royalties than many, able to negotiate richer leases because the region came later to the boom. Royalties, which can range from 12.5% to 25% of the value of oil and gas pumped, helped revitalize DeWitt and other communities in oil patches across the United States.
John Baen, a Texas college professor who owns mineral rights in South Texas, collected as much as $100,000 a month in recent years. The payments have dwindled to $6,000 and by August, he said, "I'll be lucky to get anything." The average oil-land owner collects about $500 a month, according to the National Association of Royalty Owners, but that will not last. April's price crash was so sharp, falling at one point into negative territory, that minerals holder Jubilee Royalty Holdings received a $1 check that month from Exxon Mobil .