More oil, fewer jobs: Employment declines in the U.S. oil and gas sector
Key Takeaways:
The U.S. oil and gas industry employs 20% fewer workers today than it did a decade ago, with total employment in the sector falling from 1.26 million to 1 million.
In Texas, oil- and gas-producing regions have economically underperformed, threatening the financial health of regional banks serving the oil patch.
A decade of productivity gains means more oil with fewer workers. The number of jobs required to produce a barrel of oil has fallen by half over the last decade.
Amid steep layoffs and forecasts of prolonged low oil prices, the U.S. oil and gas industry could soon employ fewer people than it did before the onset of the shale revolution.
Despite record-setting production in the U.S. oil and gas industry, increased volumes have not translated into more jobs for either the industry or the overall economy. In fact, the industry employs 20% fewer workers than it did a decade ago, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA).
Over the last 10 years the oil and gas industry has shed 252,000 jobs, and a recent report from the Federal Reserve Bank of Dallas found that oil and gas regions also have underperformed on overall employment and wage growth when compared to non-oil and gas regions. The number of jobs required to produce a barrel of oil has fallen by half over the last decade.
“A stark pattern of declining employment in the oil and gas industry has taken shape over the last decade that has rippled out to have broader effects on regional economies,” said Trey Cowan, oil and gas energy analyst at IEEFA and author of the report. “Even taking into account the cyclical nature of the industry, over time employment losses seem to be outweighing employment gains.”
The last decade has shown that job losses, not growth—as is often the claim—should be considered when assessing decisions that could use public resources or tax incentives to promote oil and gas projects.
