Energy Job Losses Continue to Soar as the Oil and Gas Industry Weathers Recent Market Turbulence

April 24, 2020

While the coronavirus continues to lock down much of the country, the collapse of oil prices has left the energy industry in need of urgent care. The sudden decline in demand resulting from travel restrictions, combined with stable supply levels, created a shortage of oil storage; which, along with futures trading practices, resulted in U.S. prices for crude oil dipping below zero for the first time ever.

As a result, sellers were forced to pay buyers to alleviate the burden of excess supply, leaving many jobs at risk.

“On April 20, the May futures contracts for West Texas Intermediate crude oil dropped more than 100 percent in a single day, as sellers paid buyers to take the product off their hands. Producers also took a hit as oil prices dipped to levels not seen since the 1950s.”

While a lack of demand and the pricing conflict between Russia and Saudi Arabia are short term issues, the problem of surplus production could have long-lasting impacts on the industry and its workers. 

“About 10 percent of the world’s oil tankers are currently being used as storage for the oversupply. Industry experts estimate that about 40 million gallons of Saudi Arabian crude are heading to the U.S., which will add to the overstock.”

This precarious position promotes uncertainty, especially for workers and their prospective employment. Bud Weinstein, economist and associate director of Southern Methodist University’s Maguire Energy Institute, emphasizes the magnitude of the situation.

“The oil and natural gas industry in the U.S. represent 5.6 percent of the U.S. workforce — that’s about 9.8 million jobs, according to the American Petroleum Institute, one of the main trade associations representing oil and gas producers, processors and distributors. Over the last two months, there have been tens of thousands of layoffs in Texas, mostly in the exploration side of the business.”

Last week, Baker Hughes and Halliburton, announced their plans to cut a further 6,400 jobs in Texas.

With over 22 million Americans filing for unemployment, as of April 23, states are already beginning to run out of money to provide to those without jobs. President Trump has long promised not to let down the energy sector and it is imperative that he keeps his word. Financial support should help the industry during the crisis, but any real recovery requires increased demand. As for now, the industry remains in a state of limbo, unable to relieve their reserves until the country begins to reopen.