oil gas workers
Report says job and wage cuts largely due to plummeting oil prices from low demand.

The coronavirus has hit a lot of industries hard, and thus is the case for oil and gas. More than 100,000 oil and gas jobs have been lost, according to Rystad Energy’s analysis of data from the United States Bureau of Labor Statistics.

Rystad, an independent oil and gas consulting services and business intelligence data firm, released its analysis June 12, saying the oil and gas labor market “is among the world’s most severly hit by the downturn” from COVID-19.

Pre-pandemic, support activities for oil and gas operations totaled 233,550 jobs. Now, about 44,550 jobs have been cut from that segment. In pipeline, gas and other related construction, 16,000 jobs have been cut from 227,000. Drilling jobs have lost 13,450 from 79,450, and oil and gas extraction is down 9,600 from 156,600.

In addition to these four segments that were included in the Bureau of Labor Statistics data, Rystad’s report also added more components in the oil and gas industry, bringing the total to 100,000 at this date. The report said just the support activities segment shows a 20 percent employment dip compared to levels in February.

“The job cuts can be attributed mainly to the nosediving oil prices driven by a sharp contraction in domestic oil demand, which has resulted in an unprecedented demand-supply imbalance. In response to the weakened demand, operators and service providers alike have been frantically cutting jobs,“ says Rystad Energy’s Vice President Energy Service Research Matthew Fitzsimmons.

While the demand for heavy construction labor increased by 3.4 percent in the U.S. in May, the oil and gas industry did not add to this increase. Rather, oil and gas construction jobs have decreased by more than 10 percent since February, according to Rystad. The analysis shows that construction activity will be an area where oil and gas is likely to show caution, especially while COVID-19 risks persist.

The Rystad analysis brought up interesting points about working conditions—onshore construction workers may be able to social distance easier and still complete their tasks. Where risks may arise is during work breaks. The analysis recommended “spreading out the times for breaks and installing additional breakout trailers to minimize the risk from these situations.”

In Louisiana, more than 40 percent of liquefied natural gas (LNG) investments that were scheduled for this year have been postponed or canceled, according to Rystad. Louisiana may see a decline of almost 25 percent in its oil and gas workforce, according to the Louisiana Oil and Gas Association.

Texas has also been hit hard, with more than 45,000 jobs in the upstream sector lost since February. 

In addition to job cuts, Rystad estimates that wages for trades in the oil and gas industry may see a decline of at least 8 percent to 10 percent heading into next year.

“Overall, the impact of the job cuts would be greater for the oilfield services (OFS) sector than for exploration and production companies. OFS companies are likely to see more than 20 percent of its shale, onshore and offshore workforce combined cut by the downturn. While other industries have started to see labor demand embark on a road to recovery, oil and gas workers will have to wait longer for demand to increase,” Fitzsimmons said.

Clean Energy Jobs Also Hit

In May, more than 27,000 clean energy jobs were lost in the U.S., bringing the total to 620,500 since COVID-19 hit. According to a report from Environmental Entrepreneurs (E2), E4TheFuture and the American Council on the Renewable Energy (ACORE), California, Florida, Georgia, Texas, Washington and Michigan are among the states that have suffered the most job losses.

The report states that this is the sector’s third straight month of job losses among solar, wind, energy efficiency, clean vehicles and other industries. Before the pandemic began in the U.S., clean energy was a growing employment sector, growing 10.4 percent since 2015 to almost 3.4 million jobs by the end of 2019.