THIS Job Sector Lost 100,000 Jobs During COVID and Most Aren't Returning
For many decades, the oil and gas industries were some of the most reliable in the world. They employed people at all education levels and offered stable jobs for entire towns. However, as newer, more sustainable forms of energy were discovered, oil and gas are starting to struggle. The COVID-19 pandemic may be the final straw that ends the industry for good.
Mass Cuts in the Oil and Gas Sector Continue
When the first layoffs in the oil and gas sector happened, people assumed it was a minor blip. However, the amount of jobs being cut continues to rise. This week, the industry was shocked to hear that ExxonMobil was reporting losses for the first time in decades. The company was once the most valuable in the world, yet it is now announcing plans to lay off 1,600 more workers. Meanwhile, Shell is in the process of laying off 9,000 people and BP has plans to lay off 10.000. Schlumberger, the biggest oilfield services firm in the world, also has announced 21,000 layoffs.
Industry Report Indicates That Jobs Won't Come Back Soon
An analysis published by Deloitte this week provided a grim outlook for the industry. According to the report, even if oil prices remain steady, 70 percent of the jobs lost during the pandemic will not return by the end of 2021. The large scale layoffs from the pandemic have greatly hampered the industry's ability to recover. Any further decline in gas and oil could have disastrous effects. Job stability in the industry is worse than ever. In the 1990s, a $1 change in prices could affect 1,500 jobs. Now, a $1 change could affect 3,000 jobs. This means that any shift in current oil and gas prices will have an oversized effect on hiring practices.
Loss of Talent May Make it Hard to Recover
A major reason that the outlook is so poor for oil and gas is due to brain drain. The industry relies on highly trained workers, yet it is now pushing these people to find jobs in other fields. There is currently a big demand for those who work in technology and engineering, so these workers may end up deciding to transition to other industries altogether. If the oil and gas industry does start to recover, it will find that it might be hard to attract qualified workers needed for key positions. Without innovation and expertise, many companies are left following old strategies that no longer work in a changing world.
Gas and Oil Prices Are Not Rebounding
Even with restrictions lifted across the country, oil and gas prices are still at sub-zero levels in some places. Part of the problem is that citizens are still too cautious to travel a lot, resulting in a lack of demand for fuel. The bigger issue is that there was already an extreme oversupply. Saudi Arabia and Russia were in the middle of a price war when the pandemic hit, and then they were suddenly unable to offload all their excess supply. In some places, there still is not room to store all the surplus oil being produced. This has caused many companies to halt production abruptly, resulting in rapid job cuts. Even as demand gradually comes back, the massive over supply will still keep many companies from needing to hire more employees for a while.
Growing Climate Crisis Concerns Will Lead to Further Problems
The declining prices and lack of interest among educated workers is not the only issue. Another big reason the oil and gas industry will not recover is because of the climate crisis. There has been talk of moving to clean energy companies for years, and more and more consumers are starting to follow through. It is becoming very difficult for fossil fuel companies to attract investors. Right now, the weighted average cost of capital for oil and gas is twice as pricey as it is for renewable energy companies. Thanks to the pandemic, the general population is pessimistic and prone to being cautious right now. This is leading to more environmental concerns and a larger focus on renewable fuel. Many oil and gas companies are scrambling to adapt a sustainable reputation, but for many, it may be too late.