U.S. Oil Companies Are Making Record Profits but Not More Jobs

U.S. Oil Companies Are Making Record Profits but Not More Jobs

Five major oil and gas companies are set to release their Q2 earnings reports on Thursday and Friday. The numbers are already astronomical: Shell announced Thursday it had made a jaw-dropping $US11.5 ($16) billion in profit last quarter, smashing a record it set earlier this year. The industry is expected to log a record $US50 ($69) billion profit overall, while oil giant ExxonMobil may also post its biggest quarterly profit to date on Friday. But this huge influx of cash, new labour numbers suggest, may not translate into providing more jobs in the U.S.

An analysis of Texas oil and gas employment numbers from the Institute for Energy Economics and Financial Analysis (IEEFA) shows that, despite a short-term burst of jobs over the past few months, the oil and gas industry in Texas, the nation’s biggest oil and gas producer, has been lagging behind overall job growth in the state. Jobs in the industry in Texas are still behind pre-pandemic numbers, despite an incredible financial windfall over the past few months.

“The industry was behind the curve on production, and now they’re trying to catch up,” said Trey Cowan, an analyst at IEEFA who comprised the Texas numbers from Bureau of Labour Statistics data. “Relative to prior cycles, it’s much less hiring, meaning they don’t need as many people to create production as they did five to six years ago.”

In 2020, the oil and gas industry was faced with record low prices during the early months of the pandemic — including a panicked week where prices for a barrel of oil actually dipped into the negative. By that September, the industry had lost 21% of its workforce in Texas, some 76,300 jobs across all sectors of the industry. In the intervening 22 months, the industry has added just 39,400 of those jobs back, a little under half of what was lost. This downturn in the country’s biggest oil- and gas-producing region tracks with national statistics. Nationally, according to an analysis of Bureau of Labour Statistics data by the Energy Workforce & Technology Council, there are 633,198 jobs in the industry as of this June — about 10% down the pre-pandemic roster of 706,528.

Over the past few months, the Texas oil and gas industry has added jobs at a pretty fast clip. But, Cowan said, that’s no reason to think that that pace of growth will continue or that the industry will eventually employ as many people as it once did. The industry looks substantially different than in 2014, when oil and gas jobs in Texas reached their record high of 429,300. Wall Street is no longer pouring money ad hoc into the fracking boom, where many investors lost money in the last decade; much of the huge profits the industry is raking in right now are going back to line their investors’ pockets. Workforce and supply chain issues have affected oil and gas, as they have affected all industries. And tech has changed the name of the oil and gas game, making jobs that once required more workers automated or able to be done with fewer hands.

“There’s been quite a bit of innovation over the years,” Cowan said. “There’s automation going on, and a lot of times it’s more technological where they’re figuring out ways to optimise the process in case of drilling.”

Major oil producers have echoed Cowan’s sentiment. Oilfield services company Halliburton employed 60,000 people in 2019 but has since lost about 16,000 workers due to technology shifts as well as attempting to cut costs during the pandemic, the company told E&E News. “Many of the jobs removed as a result of these changes will not return,” Tracy Josefovsky, Halliburton’s vice president of human resources, told E&E in a statement.

The reality of oil and gas companies hiring fewer and fewer workers hasn’t seemed to reach pro-oil politicians. A clamoring group of GOP figureheads, supported with messaging from the industry itself, have repeatedly claimed that the Biden administration’s environmental policies are hurting the industry’s ability to provide jobs.

“I think it’s a red herring,” Cowan said. “The industry is figuring out how to do more with less in terms of jobs — it’s an efficiency thing, not a productivity thing. It has nothing to do with Biden. They’re trying to drive as much profit and do it as efficiently as possible.”

Given how deep the GOP is in the pocket of Big Oil, it’s not surprising that they’d try to make a scapegoat out of the Biden administration’s milquetoast opposition to the industry. But even when they were receiving public money as a bailout for job loss during the pandemic, oil companies still used those funds to shore up payouts for their executives rather than re-hire their workers. No matter the economic circumstances, the oil industry’s bottom line always remains the same.

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