The oil industry is facing a long jobs slump
The oil, gas and chemicals industry shed 107,000 U.S. jobs in March–August as the pandemic hit prices and the wider economy, marking the fastest rate of layoffs in industry history, Deloitte analysts said.
Why it matters: Their new report released Monday warns that the sector's employment may remain depressed for a long time.
- Just 30% of lost jobs will have returned by the end of 2021 in their "main scenario," which sees U.S. oil prices stuck at $45 per barrel and natural gas at $2.50 per million British thermal units.
- A "pessimistic" case with oil at $35 and gas at $2/mmBtu shows just 3% of jobs coming back by then.
- But even their "optimistic" case (where oil is at $55 and gas at $3) shows only 76% of those jobs will return by the end of 2021.
- Note: The tally of 107,000 layoffs does not even include furloughs.
Threat level: Industry employment has gotten more sensitive to changes in prices thanks to the "short cycle" nature of shale projects. By the mid-2010s, this "cyclicality" was twice as high as the 1990s, per Deloitte.
- "A monthly correlation of oil prices and employment ... reveals that a dollar movement in oil prices affected 3,000 exploration and production and [oilfield services] jobs vs. 1,500 in the 1990s."
What's next: Companies should use the crisis to better position themselves via steps like embracing low-carbon energy transition and trying harder to lure young talent in fields like "data scientists, emissions officers, or user-experience designers."
Go deeper: The oil and gas industry has lost more than 100,000 jobs this year (Fortune)