The vast majority of jobs the US oil, gas and coal industries shed during the Covid-19 pandemic are not coming back anytime soon, according to a report by consultancy Deloitte.
Assuming crude prices stay near $45/bl, the report estimates that 70pc of the 107,000 jobs lost during the pandemic as of August will not return by the end of 2021. That figure jumps to 97pc should prices fall to $35/bl.
Covid-19 has laid bare a striking trend of the past few years: the growing sensitivity of oil and gas jobs to crude price swings, due in large part to the rapid change in supply and demand cycles in shale production. Shale producers are more likely to make quick, sharp cuts or additions in drilling activity in response to prices than in the past. Shale drilling is also more people-intensive than conventional oil and gas drilling, so those movements also impact a larger number of workers.
Since 2014, a $1/bl change in oil prices potentially impacted 3,000 upstream and oilfield services jobs compared to impacting 1,500 jobs in 1994, according the report.
Covid-19-related work and travel restrictions have decimated the global economy, plunging the US and other countries into recession, and with it demand for energy supplies. WTI's brief yet unprecedented dip to a -$39/bl price last spring, after starting the year above $50/bl, has led energy companies to slash jobs at the quickest rate in their history.
The US economy continues to struggle with over 800,000 people filing for unemployment benefits last week, according to 8 October federal data. The unemployment rate is at 7.9pc.
Though energy companies were able to reduce operating expenses by 17-30pc during the last downturn in crude prices from 2014-2016, they are running out of room to cut costs this time around, the Deloitte report said. So the industries must find ways to reinvent their workforce to encourage innovation and make operations more agile and efficient.
For example, Deloitte urged companies in the oil, natural gas and coal industries to embrace digitization of their operations and hire more people with mathematics/analytics backgrounds. The report noted companies posted less than 4pc of their job positions for non-energy regions like Silicon Valley.
"While extremely challenging, this downturn represents an opportunity for companies to reposition," said Kate Hardin, executive director of Deloitte Research for Energy and Industrials. "This is the time for strategists …to adopt redesigned, cyber-physical teams and embrace a digital workplace as a basis for future innovation."
