More oil, fewer jobs: Employment declines in the U.S. oil and gas sector
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Key Findings
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.
Executive Summary
According to Karr Ingham, president of the Texas Alliance of Energy Producers, the oil and gas industry has a jobs problem: "For the better part of 10 years now, it has become increasingly apparent that the industry simply needs fewer employees to produce ever-higher volumes of crude oil and natural gas."
His assertion is backed by U.S. Bureau of Labor Statistics data showing that the industry has shed 252,000 workers over the last 10 years. When multipliers are applied to the various industries that comprise oil and gas employment, roughly 2 million-plus indirect and induced jobs (employment created by personal spending of direct and indirect workers) nationwide have been lost due to shrinking oil and gas employment over the past decade.
The Federal Reserve Bank of Dallas has reported similar conclusions that support our thesis. In their recent report researchers for the Dallas Fed found oil and gas regions underperformed on employment and wage growth when compared to non-oil and gas regions.
Job losses, not job growth, should be considered by policymakers deliberating decisions that would use public resources or tax incentives to promote oil and gas projects.
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