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Layoffs Surge As Oil Price Outlook Remains Sober
Submitted by Andy Tully via OilPrice.com,
Lately the leaders of some of the world’s biggest energy companies have been saying oil prices will remain depressed for some time – perhaps for the next five years – and now they’ve decided to cut their costs in the most painful way possible: massive job cuts.
Royal Dutch Shell announced July 30 that it expects to eliminate 6,500 positions. The announcement came the same day it reported that earnings in the second quarter were $3.4 billion, 33 percent lower than the $5.1 billion it made during the same period of 2014.
The same day, the British utility Centrica said it plans to cut fully 6,000 jobs and reduce the size of its division for producing oil and gas. The day before, Chevron Corp. of the United States expected to eliminate 1,500 positions.
And as oil producers struggle to rein in spending elsewhere in their operations, the pain is being shared by the oil service companies they rely on. The Italian energy contractor Saipem, for example, says it plans to cut 8,800 jobs in two years.
“We have to be resilient in a world where oil prices remain low for some time,” Shell CEO Ben van Beurden said in the statement. “These are challenging times for the industry, and we are responding with urgency and determination.”
It may be too early to determine whether the price of oil, which began falling a year ago, was now forcing the energy industry to go beyond cutting fat and is now gouging into the very sinew of its operations, but it’s clear that they’re convinced that other economies simply weren’t enough to keep themselves afloat.
And all because of the steep decline in the price of oil. In June 2014, its average global price was more than $110 per barrel. Now it’s around $50 per barrel, despite a brief, small spike recently that brought it up to around $60 per barrel.
The price fall began because drillers in the United States had increased oil production, mostly from shale deposits, which are more expensive to exploit. Instead of reducing its own production to help boost prices, OPEC, under Saudi leadership, decided at its semiannual meeting in November to keep production at 30 million barrels a day in an effort to make shale drilling unprofitable.
To make matters worse, OPEC members are exceeding that cap by about 1 million barrels a day. And the future doesn’t look any brighter, as Iran is expected to return to the global oil market next year, thanks to an agreement with six world powers over limiting its nuclear program.
The job losses probably should come as no surprise. Two weeks ago, van Beurden said that “prices could stay low for longer” unless energy companies produce less. He wasn’t more specific, but Andy Brown, Shell’s director of oil and gas production outside America, said he expects only a gradual recovery over the next five years, not only because of the oil glut but also lower demand in China.
And Bob Dudley, the CEO of BP, also says he expects oil prices to stay “lower for longer.” His chief financial officer, Brian Gilvary, used the same words on July 28, the day their company reported the second-quarter loss of $6.27 billion. Much of that loss was due to the company’s spending to remedy the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, but clearly BP’s leadership doesn’t expect to make it up by selling oil at rock-bottom prices.
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it's the recovery, stupid
Sobriety Sucks
-Charlie Sheen
India's Govt. oilCo is spendiing massively on expansion into global and Indian off-shore fields.
Deep fields also. I imagine that is a symptom of opportunities popping up in new parts of the world. Heck, I hear ISRAELL (State of) might need some O&G pros soon...
Banks are happy to lend billions to said oilcos....
While we burn oil as we do, there will be jobs for what is also a pretty mobile work-force, used to to working remote places...
But local impacts where the shut/slow-downs are happening will be intense...
I went to shcool in upstate NY (RPI) which is close to the bombed out shell called Schenecdety, which, when it was GE's global HQ, was a prime town...by the mid-90's a scary place, almost detroitesque, only white trashy....
I believe it's time to get entrepenurial all around....
Fuck the MAN....
texas is the new venezuela.
Not yet but soon.....Houston already looks like Tiajuana.
WRONG..
It looks a bit more like New Orleans.
. with humor and best intentions.. :-) .
Perhaps, they can be sister cities? The only pre req is Houston must have a Zona Roja.
a fucking sweaty armpit...
ORI.. you guys are really important and will be a key to bringing the supply down and the price of Ag up with massive PV cell deployment.. as you migrate towards less carbon and more sustainable energy.
.. it’s not like you are the second most populous country on the planet or something :-)
Here comes the global recovery.....A flavour of bankruptcies below in the LAST 1 MONTH worldwide!
31 Jul 2015: Nigeria: Oil.
Oil producer Afren to be put under administration
30 July : USD: Movies
Relativity Media Files for Bankruptcy Protection, Hoping to Sell Itself27 July 2015: Indonesia: Coal.
Creditor starts bankruptcy proceedings against Indonesia's Berau
15 July 2015: USA: Coal
Coal miner Walter Energy files for bankruptcy
15 July 2015: USA: Oil
Sabine sixth U.S. producer to seek bankruptcy protection this year
During July 2015: Kurdistan/Iraq: Gold
Kurdish gold prices sink to 4-year low as retailers go bankrupt
31 July 2015: India: Cement/Infra
Only ten fold rise in bad debts in the last decade for companies that have double the debt as compared to equity.
India Debt Fears Rise Amid High-Profile Defaults
Goldman spotlights India debt risk amid high-profile defaults
25 July 2015: India:
The next biggest default in India is just round the corner that has the potential to freeze the banking system. It is JUST USD 15.6 billion!
Jaiprakash Associates’ debt rating cut to default
8 July 2015: Another retailer in Canada went bankrupt as the Loonie competes with the currency Down under to see who goes down faster!
Nine West store owner in Canada files for bankruptcy protection21 July 2015: USA: Retail
Grocery chain A&P just filed for bankruptcy -- againThere was one more being PCZ Medical Holding in Poland....can't figure how big or small it was!
PCZ proclaimed bankrupt by Court in WroclawSee, now you're just being negative. I find it impossible to believe we can't find a way to financially engineer our way out of this.
It's simple. Old Yeller just needs to start monetizing oil debt, and she will if this starts getting ugly. See how I did that? Problem..... solution. Maybe I should run for CONgress.
You bet! ;) How do you make a thumbs up sign here? :)
Your debt is my debt ....and ....my debt is ....your debt...and then...it's goooonnne.....Did you see that? It's gone! :)
Hey, that's a pretty cool trick. Can we do it again (and again and again and again)?
Welcome to another robust Summer of Rekovery!
Talking of recovery....just found this cool infographic that shows which are the top 10 counties and top 10 states for bankruptcy in the US! Who would have thunk Tennesee would be No 1 and Illinois as No 4.
I am sure Obama can do better for Illinois!
Go Chicago go! You can be No 1 in BANKRUPTCY!
No one left behind! :)
Report: Law Firm Discovers Interesting Fact About Most Bankrupt Places in America
I distinctly remember when oils was pushing $150 per barrel all the "analysts" were saying that OPEC didn't have the capacity to bring oil prices down. Now they claim the the Sauds alone can push oil prices down below $50 a barrel. I'm calling bullshit. The fact is that the paper price of oil has driven a great deal of malinvestment and we are in a global depression and there is no demand for oil and commodities. Take your bullshit report and shove it Andy!
"Analyst". That's funny. Hold on a second.....
I'm gonna put on my Clark Kent glasses.... grab this clip-board.... put some charts up on the screen..... book a guest appearance on CNBC..... TA DA! I'm an analyst.
I WAS that guy. Then, 'work' started when I turned on the computer and took a bite of my 'Dean & Deluca' treat. Today, 'work' starts when my Deere diesel fires. I think the camo cap fits me better than the 'bespoke' suit. . .
The same companies the government was going to hit with a "windfall profits tax" a few years ago.
Reminds me of the line Teddy KGB gave in 'Rounders':
It hurts, doesn't it? You can't believe what fell. All your dreams... dashed. Hopes down the fucking drain. Your fate is sitting right beside you. That Ace could not have helped you.
The oil companies would make more money producing half the product,and selling it for twice the price,but in todays "new economy",the more money you lose,the more profitable you are..
It would take hundreds of oil companies to get together with OPEC and the rest of the non-OPEC countries to agree on how much oil each of them should produce. OPEC can't even agree among themselves.
You could say the same thing about televisions and computers. If all of the companies would get together and agree to produce half the amount of units, they could sell them for twice as much.
Not so easy, is it?
phew, good thing we lowered our jobless claims before this happened!
No more "job lock" for these lucky bastards says Nancy Pelosi
The Debt swamp will swallow up the world economies at some point. Frackers bet heavily on high oil prices, and borrowed from investors using high return junk bonds. Now they are pumping at a loss every day, have the debt overhang and their hedges are used up. Failure and layoffs are next. Remember, this was America's one real bright spot in high wage job creation. Everybody else bar tends, cleans motel rooms, serves burgers or cleans bedpans at the local nursing home.
This does not stop America from funding the worlds largest military, the world's largest spy complex, the worlds largest foreign aid program and a war in Afghanistan.
America seems not to need jobs. It is a miracle of finance capitalism that America needs no factories to prosper. Only Health Care and Armies suffice.
June 23, 2015
http://www.bauer.uh.edu/centers/irf/houston-updates.php
It's the "jobless recovery," Jack.
Could always move to DC and get a job as a whore.
Lou Reed says to take a walk on the wild side.
And the colored girls sing, do do do ..........
You mean Afghan Heroin distribution, don't you?
How many US soldiers committed suicide last week?
"Only Health Care, armies, and weaponized domestic police forces suffice."
there, fixed it.
http://www.labor.ny.gov/stats/mls.shtm
Important Notice
On March 1, 2013, President Obama ordered into effect the across-the-board spending cuts (commonly referred to as sequestration) required by the Balanced Budget and Emergency Deficit Control Act, as amended. Under the order, the Bureau of Labor Statistics (BLS) must cut its current budget by more than $30 million, 5 percent of the current 2013 appropriation, by September 30, 2013. In order to help achieve these savings and protect core programs, the BLS will eliminate two programs, including Mass Layoff Statistics, and all "measuring green jobs" products. The final release of Mass Layoffs Statistics data will be the publication of the May 2013 data.
Poor Houston.
Here come the real estate vultures.
vvvvv
Thank you for your service, unfortunately the global community has finally caught on to Henry Kissenger's petrodollar recycling program used to create Federal Reserve market bubbles under Zero Inter Rate Policy.
Chrome dome Mr. Janet Yellen will have to avert to NIRP before to system implodes before elections. All those perps who can illegally vote legally for Democrats election. No Diabold finger print or US ID needed. Andy Mattes will provide a free breakfast, lunch, and dinner.
https://www.boardroominsiders.com/executive-profiles/11223/Diebold-Inc./...
Andy, let's vote using Lonocloud. That should help vote for the right candidate. You can drop a iapp and forget to record mutiple IP addresses under application of a single IP. Weeeee!
More fodder for the neocons' ReadyReserve.
Liberty is a demand. Tyranny is submission..
Hey Christian! Yes, you! Need work? Love your nation? Well, we have just the opportunity for you. We will pay you to assist us in plunder, murder and treason. Well, we call it "protection and security," but tomato, toomato. Anyways, how would you like the exciting experience of going around taking people's property, and/or lives? Harassing subversive 4 year-olds and their families through barbed wire. Not to mention being able to keep anything you can pilfer and put in your pockets while also being paid? Sound good to you? Well, sign up is at your church on Sunday. Don't worry, your pastor has been paid to find the pertinent Bible verses that justifies it all. Yeah, that's right: You'll also be doing "God's work" too. Can't get any better than that, now can it? See 'ya Sunday; Where your best cammies."
And the Democrats promise to feed and cloth you. So you don't run off the plantation and remain a loyal slave.
Both systems are awful. It all begins with tolerance levels and asking yourself, What really changed?
Think long term: Oil prices lower so we have to cut the work force, boom magic happens and some black flag event, oil prices shoot back up in a years time but with 15,000 less employees. Think of the profits.....
I would like to take this time to thank the CEO of BP for his profound conclusion that oil will stay "lower for longer".
SOMBER I think u mean
Great thought, how do you calculate the demand side of formula? Remember, it requires trucks to deliver food. Farmers use AG diesel fuel, then transport product to producer. The TPP is going to be the next train wreck under your projections. Cannot happen to a better scumbag like yourself.
LATELY the energy distributors have been selling gasoline for (almost) $5/gal at the pump in Los Angeles. So they buy at record low prices, and sell at (nearly) record high prices. And they still need to lay off personnel.
I think somebody better take a look at what those execs at BP, Exxon and Chevron are making. HECK, before you know it, they may have to slice deep into their lifestyles and only own ONE golf cart.
The demand for oil will diminish until the so-called 'superpowers' decide to launch World War Three to stimulate demand. What is now clear to the top oil producers is that they will not see increasing market demand in their lifetimes unless the superpowers go to war.
And now things must be starting to get serious in the halls of so-called 'power' because all the bellwether industries are failing systematically like clockwork, or an extremely fucking _dangerous_ Mandelbrot Set of fractally significant quantum economic destruction. Clearly, with Goldman Sachs indicating that they have found the economy running 'in circles' like a Hegelian Spiral, and all the large cartels suddenly imploding once again, it seems logial to assert that the top minds in the World don't have even the slightest clue what they are doing anymore.
When will Goldman Sachs admit that they have lost control of global markets?
Frankly, I think I should write a long letter to GS and demand an office next to Blankfein so I can throw paper airplanes at him all day and tell him what a retard he turned out to be over time.
Okay, I'll see that and raise you one ruble ..
One can ascertain USA modus operandi via American Hegemony & Reserve Currency. Look at Ukraine alone and one can determine the Pentagon would never settle for a fair and unbiased basket of cuurencies as the globla reserve currency due to the fact that American Parasitism is based on Reserve Currency, and the fact that Americans had been forcing all countries to purchase oil in American petro-dollars simply to force servitude on all peoples of the World to USA supremacy.
The problem with the whole global lot of oligarchs is that they mistakenly thought their global cartel was impenetrable by anyone outside of that cartel. And that's where they collectively fucked up due to their collective ignorance regarding closed looped systems and the Second Law of Thermodynamics. Little did they know that Maxwell's Demon was waiting for them to collectively drop their drawers before operating the gate to let more gas out of their bubbles when they were looking the other way.
p.s. I agree wholeheartedly that American Policy makers are crazed.
;)
Woo a post from oilprice.
How come Tyler keeps ignoring oilprice posts that highlight the EIA's dodgy US production figures?
Normally he'd be all over rigging like this.
http://oilprice.com/Energy/Energy-General/EIA-Capitulates-Under-Cover-Of...
How is a small bank like BOKF not going to be immensely affected by all this when they are located right in the middle of shale shitty? Every loan has, in some way or another, oil affilated with it. Lots of job losses, lots of mortgages, lots of car loans.... you get the idea. BOKF could be a MONSTER homerun that's currently in the mid $60's.