TLTP
LONDON
More than 100,000 jobs were lost in the US oil exploration and production industry between March and August this year, mostly as a result of the coronavirus pandemic. Another 35,000 jobs were shed in the downstream segment.
But that’s not the end of the bad news. Most of these jobs are not coming back at least until next year. Some could be gone forever.
These are the highlights of a Deloitte report released earlier this month. The job loss or its pace—the fastest ever—is not surprising. The effect of the pandemic on the industry was quick and devastating, with oil production in Texas alone dropping by 13 percent in the three months from March to May alone. To compare, during the last price crisis, oil production in the state declined by 13.7 percent over 18 months, according to the Texas Alliance of Energy Producers’ Karr Ingham, the creator of the Texas Petro Index.
Such a fast contraction of activity resulted in an equally rapid loss of jobs, and the growing number of bankruptcies also contributed to the job losses.
If not for the pace of the events, this would be business as usual. The oil industry always sheds jobs during the low phase of its cycle.
What is even more unique this time around is that many of these jobs may not be coming back at all. “Our multivariate statistical analysis on employment and market data suggests that as much as 70% of jobs lost during the pandemic may not come back by the end of 2021 in a consensus business-as-usual scenario,” the Deloitte analysts wrote in their report. The problem is, few expect 2021 to bring a return to business as usual. If oil stays cheap, all but 30 percent of the 107,000 upstream jobs lost in the second quarter alone might stay gone through the end of next year.
Almost two years is a long time for most people, especially those employed in a cyclical industry such as oil and gas. Some will find jobs in other industries, with renewable energy apparently a strong candidate as investments in solar, wind, and other generation technology rising while those in oil and gas shrink.
