While consumers enjoy lower fuel prices associated with the energy downturn, cheap oil is to blame for the loss of nearly 200,000 jobs, according to a report issued on Thursday by outplacement firm Challenger, Gray & Christmas, Inc.
Almost 95,000 jobs have been eliminated in 2016 by energy companies, according to the Chicago-based firm. Most of the job cuts occurred in the first quarter of this year, when oil prices fell to $26 a barrel. Challenger’s report also revealed a second wave of layoffs occurred in July, when the energy sector cut nearly 18,000 jobs.
The layoffs have occurred at a time when other industries have experienced an increase in the employment ranks. Last month, the Oklahoma Employment Security Commission’s jobless figures indicated that the state’s energy sector went from 53,800 jobs in June 2015 to 43,900 jobs in June 2016, reflecting a loss of almost 10,000 jobs. The OESC report also reflected a loss of 800 energy sector jobs between May and June of this year.
Energy sector layoffs wreak havoc on our economy as well as those who are personally impacted by the employment cuts. According to Goldman Sachs, the average pay in the oil and gas industry is 84% higher than the national average. Energy stalwarts like Baker Hughes, Halliburton and Schlumberger have not been exempt from axing jobs. Local oil and gas companies including Devon, Chesapeake and SandRidge have undergone human capital restructuring efforts in addition to asset sales.
“The industry has been hit harder than we’ve seen in the 15 years we’ve been in the business, much harder than ’08 downturn,” said Jeff Bush, president of oil and gas job recruiter CSI Recruiting.
The loss of energy sector jobs also affects other industries too. Oilfield tool servicers, construction machinery manufacturers and transportation companies are affected by the energy sector layoffs.
If there’s a silver lining to the current state of affairs in the industry, it may be in the form of a worker shortage when energy companies resume operations.
Goldman Sachs predicted an immediate need of 80,000 and 100,000 highly skilled workers by the end of 2018.
“Not only have laid off workers relocated to other areas for new jobs but, just as in many other industries, a large portion of the workforce is reaching retirement age,” said John Challenger, CEO of Challenger, Gray & Christmas.