"Unambiguously Bad"

As of November, oil and gas companies employed 543,000 people across the U.S., a number that’s more than doubled from a decade ago, but as Bloomberg reports, thousands of energy industry workers are now getting their pink slips as crude prices have plunged to less than $50 a barrel. "For the oil and gas industry, it’s scary," explains one worker, adding "I was blind to the ups and downs associated with the industry." Can we blame him, watching business media and one could be forgiven for believing this plunge is "unambiguously awesome." As the following chilling chart shows, however, it is not...

As Bloomberg reports,

Stunned by the sudden plunge in the price of oil, energy companies have increasingly resorted to layoffs to cut costs since Christmas, shocking a new generation of workers, like Osakwe, unfamiliar with the industry’s historic boom and bust cycles.

 

Workers who entered the holiday season confident they had secure employment in one of the country’s safest havens now find themselves in shrinking workplaces with dimming prospects.

As the following anecdotes illustrates, more than a few Americans are becoming greatly disillusioned...

Sean Gross, 35, was over the moon when he secured a job in March last year at Schlumberger Ltd., the world’s largest oilfield service company. He’d been laid off from a technology company and saw the oil business as his salvation.

 

“I was happy. My life was starting to take shape. Life was really, really, really, really good,” he said.

 

...

 

By December, Gross said talk was spreading through his Houston office about people losing their jobs “left and right.” Old-timers were suddenly retiring. Yet Gross still thought he’d be okay working in information technology far from the oilfield.

 

...

 

As a newcomer to the energy industry, he didn’t realize how crashing oil prices would ripple through the company. He’d made it through another unsettling day and was in the parking lot, buckling on his motorcycle helmet for the ride home, when he looked up to see his boss running after him. “Hey Sean, I need to talk to you in my office.”

 

“Oh God, here I go again,” Gross recalled thinking as his boss delivered the news that he was getting laid off.

There’s no firm number yet on how many oil industry workers are losing their jobs, or how many more cuts might be coming... some are well known like Halliburton and Suncor but other companies have announced layoffs, but many are making the cuts without public fanfare.

As the following comments from energy sector executives notes, things do not appear to 'stabilizing'

“We are constantly in the process of trying to right-size our company,”

 

“We do anticipate a continued downturn in domestic drilling activity.”

 

...will continue to make adjustments to its workforce “based on current business conditions,”

 “While these reductions are difficult, we believe they are necessary to work through this challenging market,”

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Still unsure whether to 'believe' - here is some data... it's not just about the energy sector workers... they are the highest paid workers of the new normal and the multiplier effects are clear...

As oil started to slide, Texas was the first to show decoupling from the broad US picture. Then as the plunge accelerated, both Texas and the other major Shale States saw big surges in initial jobless claims (most notably in PA and CO recently). This is now bleeding over into the broader US jobless claims data...

Chart shows 4-week average of initial claims rebased to 100 at end Aug 2014.

*  *  *
We leave it to industry workers to sum it all up:

“When the oil price goes down, everything happens quickly,” Beaton said.

 

As industry analysts and consultants increasingly predict that low oil prices could linger for years, laid off workers face a workplace where their chances of getting rehired by an energy company are remote. Many don’t plan to even try.

 

“I’m pretty much decided I’m not gonna do this oil thing again,” Brewer said.

*  *  *

"Unambiguously bad"