The oil and gas industry is laying off workers at an unprecedented pace to cope with a pandemic that crashed energy prices and raised doubts about the future of fossil fuels.
The oil, natural gas, and chemicals industry in the U.S. eliminated 107,000 jobs between March and August of this year, according to a report released by Deloitte on the future of work in the sector. It’s the “fastest rate of layoffs in the industry’s history,” the report says—a remarkable pace even for a sector famed for its sky-high booms and punishing busts.
Oil prices were hit particularly hard by the pandemic, which caused a record collapse in demand for jet fuel, diesel and gasoline.
The situation was exacerbated by extreme oversupply. Heading into the pandemic, the United States was producing near record amounts of crude oil. Then Saudi Arabia and Russia engaged in an epic price war that amplified the glut, causing the oil industry to nearly run out of room to store all the excess barrels.
Between 2014 and 2019, a single dollar swing in oil prices affected 3,000 exploration, production, and oilfield services jobs, Deloitte said. That’s up from 1,500 jobs throughout the 1990s, when rising oil prices also largely added jobs. In the years between—the first decade and a half of the 2000s—jobs were highly price-sensitive, too, the report notes. But because oil prices were rising, those jobs were being added, rather than taken away.
But this time around, many of the jobs lost aren’t expected to come back quickly. If oil stays around $45 per barrel—at the moment, it’s well below that—70% of those jobs will not return before the end of next year, the report predicted.