In West Texas, rising oil prices are fuelling a sharp economic upswing, lifting employment and pay to records, driving up spending at hotels, restaurants, and car dealerships, and raising the cost of housing and other essentials.
This parched patch of land, under which lies the largest oil-producing rock formations in the United States, is the epicenter of a growth binge that shows just how tight the link remains between low unemployment, rising wages, and upward pricing pressure.
After a two-year crash, the price of crude began to recover in 2016 and pierced $60 a barrel early this year. But oil is still far cheaper than at the peak of the previous eight-year boom that began in 2006 North Dakota's Bakken oil patch and supercharged the city of Williston.
In the Permian basin, which stretches across West Texas and eastern New Mexico, the latest boom is being helped by advances in technology that allow drillers to extract much more from each acre.
"$60 is like the new $100," said Dallas Fed economist Michael Plante in a mid-April interview.
Breakeven costs are now as little as $25 per barrel, according to the Dallas Fed's most recent survey, so energy companies here no longer need $100 oil to make lots of money.
And Midland and its neighbor Odessa, the biggest towns for miles and the regional base for major oil producers in the Permian Basin, including Occidental Petroleum Corp, Chevron Corp, Apache Corp and Pioneer Natural Resources Co, are feeling the surge.
"It is a full-fledged boom," says Dale Redman, chief executive of Propetro, a Midland, Texas, firm that supplies heavyduty horsepower to drill sites, where energy companies coax crude from the ground with sand and water.
Investment by the energy sector, for years a drag on growth, has in recent quarters begun to add to it, US government figures show. But oil is only about 2 percent of US GDP, says Kilian Lutz an economics professor at the University of Michigan. That limits the effect of swings in the industry on the overall economy.
And though exports of oil have increased, helping to shrink the US trade deficit in energy by half from fourth quarter 2016 to fourth quarter 2017, the improvement has had negligible impact on the much larger overall US trade deficit, which grew during that period.
But as an object lesson in the connection between low unemployment and rising prices, Midland and Odessa does have macroeconomic implications.
On a national level, wage growth and inflation have remained surprisingly subdued even after 90 consecutive months of jobs gains, and an unemployment rate of 4.1 percent and expected to head still lower.
"If the rest of the country starts to look more like West Texas...then we will certainly see stronger wage gains" nationally, said David Berson, chief economist for Nationwide Mutual.
Berson predicts that when wage gains start to accelerate nationally, probably by early next year, they will boost inflation more than expected.
Oil companies are drilling wells faster, and putting more wells on a single site, using technology to find the best angles and depths to get the most out of each layer of shale.
That has helped boost per-employee output by Texas oil and gas companies to an estimated $820,000, according to Waco, Texas-based economist Ray Perryman.
"Companies are making enough money to be able to afford to pay higher wages," he said.
Unemployment was 3.2 percent in Odessa and 2.5 percent in Midland in February. Average weekly earnings in March hit records in both towns, which have a combined population of about 250,000. Sales tax receipts have soared.