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Production job decline lags oil price declines

Hydrocarbon Engineering,

The EIA has said that employment in oil and natural gas extraction and support activities in the US hit approximately 538 000 in October last year, but then it fell by approximately 35 000 jobs, or 6.5%, over the following six months, through April 2015, according to data from the US Bureau of Labor Statistics (BLS).

Declines in oil and natural gas extraction and support employment tend to lag behind declines in crude oil prices. As prices of North Sea Brent crude oil fell from their June 2014 level of US$112/bbl, firms reduced the number of new wells drilled and the associated workforce. The count of drilling rigs across the US totalled 857 for the week ending June 19, according to Baker Hughes. This is 54% below the same point a year ago and the lowest level in approximately 6 years.

The lag

Declines in production jobs lag oil price declines. In July 2008, Brent crude oil hit a record high monthly spot price of US$133/bbl, before falling to US$43/bbl by February 2009. Oil and gas production jobs hit a high of 381 000 in September 2008, two months after the oil prices had started to decline. Employment in drilling, extraction, and support activities then continued to fall for 13 months, when the number of production jobs fell by over 51 000. 82% of the decline in these jobs occurred after oil prices hit the lowest monthly level and were on the rise.


Data from BLS shows that declines in US oil and natural gas production jobs between October 2014 and May 2015 represent a contraction of approximately 6.5% of the industry workforce. Although unemployment rates for states that are heavily dependent on resources production remain well below the national average, the effects of reductions in oil and natural gas jobs are different in key states.

In North Dakota, the unemployment rate increased from 2.8% in October to 3.1% in May 2015, and Nebraska has replaced North Dakota as the state with the lowest unemployment rate. Oklahoma’s unemployment rates also increased from 4.1% - 4.3% in that period. But in Texas, where many report reductions in oil and natural gas jobs occurred, the unemployment rate actually fell from 4.7% in October 2014 to 4.1% in May 2015, because of offsetting growth in other areas of its more diverse economy.

Edited from press release by Claira Lloyd

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