Those who have worked in the oil industry for more than a few years know that it is a boom and bust industry, but the magnitude of the downswing in the current cycle has caught almost everybody by surprise. According to a February 11th report in Bloomberg Business, the more than 50% decline in the price of crude oil over the last six months and change is having a huge impact on labor in the Energy sector as layoffs are accelerating and new hiring is almost nonexistent.
Almost no one is hiring in the oil industry
“The issue is one of uncertainty, of whether there’s a job out there,” said Tobias Read of Swift Worldwide Resources in a phone interview. “For seven years, there was a shortage of staff. Now for the first time, there’s a surplus. Currently almost no one is hiring.”
Petroleum engineer Dipankar Das has heard from many friends across the industry as layoffs in the O&G industry became the norm across Australia.
“You get all these skills, all these projects that have been completed over the years, and then all of a sudden it’s over,” said Das, who has worked in Australia for seven years. “It’s disappointing, but what can you do?”
Global oil industry slowdown
BP and Royal Dutch Shell have already announced cuts of over $40 billion and said they’re ready to tighten further if oil prices doesn’t recover soon.
Analysts point out that Australia is hard hit, with a labor force already hurt by a major slowdown in the coal mining industry.
Energy firms such as BG Group and Woodside Petroleum, which are spending $70 billion to build natural gas export plants in Australia, are having to delay or postpone most of those projects, leaving workers without jobs.
In Brazil, a graft scandal at state-run Petroleo Brasileiro has deepened the downturn in the energy sector. Most of Brazil’s untapped resources are in the Campos basin, a formation below wide layers of salt that make drilling expensive and risky.
The uncertainty has led to the halting of development projects in Macae, a city northeast of Rio de Janeiro. International schools are shutting down as employees leave, and tax revenues related to oil this year may be cut in half, noted Joao Manuel Alvitos, the city’s planning secretary.
The Mexican oil industry is also in turmoil. At the end of 2013, Mexico took steps to end a seven-decade sate-run monopoly on oil production, expecting massive investment from the big oil companies.
Petroleos Mexicanos has promised to protect its 153,000 worker, but the firm began cutting contracts and purchases this year in a bid to reduce expense by up to $3 billion. That plan has left as many as 8,000 workers, without jobs, pointed out Gonzalo Hernandez, chief of Ciudad Del Carmen’s Economic Development Chamber in the state of Campeche.