The U.S. oil and gas industry has lost 107,000 jobs during the coronavirus pandemic, and most of these jobs may take years to return, according to a new report.The global pandemic, which plunged demand for crude and petroleum products such as gasoline and jet fuel, has led to the fastest layoffs in the oil and gas industry’s history. About 107,000 oil, gas and petrochemical workers — or about 7 percent of the 1.5 million employed in the industry nationally — have been laid off between March and August, according to a new report published this week by global consulting firm Deloitte.
Texas, the nation’s top oil producing state, has borne the brunt of the industry’s layoffs. Drilling and oil-field services companies operating in Texas employed 162,350 workers in June, about half of the 297,100 workers at their peak of employment in December 2014, according to the Texas Alliance of Energy Producers
“Such large-scale layoffs, coupled with the heightening cyclically in employment, are challenging the industry’s reputation as a reliable employer,” Deloitte said in the report.
The oil and gas industry faces a long recovery over the next year and a half as Deloitte said crude prices could remain depressed for years as growing concerns about climate change push countries and companies to shift to renewable energy. This so-called energy transition means the jobs lost during this current oil bust will take longer to recover and some may never come back.
Even if crude prices claw its way back to $45 per barrel, Deloitte estimates 70 percent of oil and gas jobs lost during the pandemic may not return by the end of 2021. If crude falls to $35 a barrel, 97 percent of jobs may not return by the end of next year. In an optimistic scenario where oil prices jump to pre-pandemic levels of $55 a barrel, a third of the jobs lost may not return next year.
After two oil busts in five years, the oil and gas industry will be challenged in its recruiting efforts to replace its aging workforce in the coming decades. The median age of oil and gas workers is 44, according to Deloitte. A little more than half of oil and gas workers surveyed by the University of Houston said they were concerned about job security.
The report comes as oil and gas companies are laying off thousands of employees in the face of low oil prices and a weakening outlook for fossil fuel demand amid increasing climate change actions.
Chevron later this month plans to lay off 700 workers in Houston, and more layoffs are expected after the California oil giant recently acquired Houston-based Noble Energy. Chevron earlier this year announced plans to lay off 6,000 workers globally by the end of the year.
Shell last month said it plans to cut up to 9,000 jobs over the next two years. BP plans to lay off 10,000 workers globally by the end of the year, and Exxon is undertaking a country-by-country review that may result in layoffs.