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Friday, March 20, 2015

Toll of Low Oil Prices: Over 75,000 Layoffs and Counting

From Forbes:
The Oil Bust of 2015 is making it cheaper to fill up our tanks at the gas station, but it is decimating our nation’s oil and gas workforce as companies slash spending in hopes of surviving the downturn. Just this week Talisman Energy has cut about 200 workers in Calgary, while Nexen Energy (a division of China’s Cnooc) slashed 400 jobs. On Tuesday, Quicksilver Resources filed for Chapter 11 bankruptcy protection. 
I received a very thorough spreadsheet from some well placed friends in the industry; it tabulates with more precision than I’ve seen anywhere else which companies have cut jobs, and how many. You can find the full list below. The conclusion: the worldwide oil and gas industry, including oilfield services companies, parts manufacturers and steel pipe makers, has laid off at least 75,000 so far. 
Considering that about 600,000 work in the U.S. oil and gas sector, this is a big hit. And it’s important to note that most of these are solid middle class jobs. There’s not many industries where a guy with little more than a high school education can make $100,000 a year, but that’s a common pay package for drilling rig workers. I’m told by people who operate a lot of drilling rigs that for every rig mothballed about 40 people lose their jobs. The U.S. rig count is down by more than 700 from this time last year. 
Indeed the average oil and gas worker makes $108,000, according togovernment numbers. The tremendous growth in these oil and gas jobs has been vital to helping the United States crawl out of the Great Recession. And keep in mind the add-on effect — every oil layoff means that much less money to be spent on meals, clothes, trucks, homes, and on and on.
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