On Tuesday, oil prices hit a 2016 high. On Wednesday morning, they vaulted above $45 a barrel for the first time since November … before dropping again after the U.S. Energy Department reported an increase in stored supplies.
So goes the oil market: short-term positive trends overshadowed by a long-term decline and questions about excess supply.
The free fall in oil prices that began in mid-2014 has prompted a major correction in the oil and gas labor market after several years of huge gains. Jobs in the oil and gas extraction industry, which rode the oil boom to 24% growth from 2010–2014, dropped 6% from 2014–2015. And online job postings related to eight core oil and gas occupations have also plummeted.
The latest job postings data from Emsi shows a nearly 50% drop in postings for petroleum engineers and geological and petroleum technicians from March 2015 to March 2016. Job ads for geoscientists sank 56% over that time.
To put the oil and gas boom and bust in context, consider these data points:
- From 2010–2014, support activities for mining and oil and gas extraction were two of the fastest-growing employment sectors nationally.
- During the same years, the top eight occupations for percentage job growth were oil and gas-related, led by derrick operators (50%) and roustabouts (49%). (Those numbers, impressive as they are, don’t include contract workers who were flooding into North Dakota, Oklahoma, Pennsylvania, and other prominent oil and gas states.)
- Petroleum engineers often topped lists of occupations with labor shortages.
Now consider that support activities for mining shed nearly 85,000 jobs from 2014–2015 — more than triple the job loss in the second slowest-growing industry, machinery manufacturing (-23,095). Oil and gas extraction lost 12,654 jobs, sixth-worst among all industries.
This is an astonishing reversal, and job postings data indicates these job losses likely won’t let up soon. Since June 2014, when oil prices started their decline from $108 a barrel, the number of de-duplicated job ads for the aforementioned oil and gas occupations have shrunk from 6,400 to 2,800.
In Texas over the last year (March 2015 to March 2016), unique job postings have also shriveled up — from 1,450 to 477. Louisiana and Oklahoma have seen similarly sized pullbacks in companies postings for petroleum engineers, geological techs, service unit operators, etc.
It’s helpful to put these job postings numbers in context. Even in the states with the most posting activity, we’re talking about relatively small numbers.
In Texas, employers posted 31,000 job ads for registered nurses in March compared to 1,450 for these eight oil and gas occupations. And in North Dakota, the center of the oil boom, companies posted fewer than 100 oil and gas job ads in March 2015 and March 2016 but hired an average of 850 of these workers per month in 2015. (That hires number in North Dakota is down from an average of 1,100 per month in 2014.)
So, what do these numbers mean? First, not all employers use job postings to recruit oil and gas workers. Like other skilled trades, postings aren’t the best indicator of labor demand for oil and gas fields.
That said, job postings in conjunction with government data sources do shed light on what’s a weak oil and gas labor market.
Is this just a market correction after hard-to-sustain growth or the start of deeper job cuts? Keep a close eye on oil prices for an answer to that question.