Every time a politician talks about climate policy or a newspaper runs a big story on the transition from fossil fuels to renewable energy, the question of jobs comes up. For those who are opposed to the transition, the common criticism is that moving away from coal, oil and gas would leave hundreds of thousands of Americans out of work. For those in favor, the question is how to train hundreds of thousands of oil and gas workers for different sorts of jobs.
Rarely do the talking points — or the debates that follow — get into the details of what’s actually happening in the oil and gas labor market: that it’s an industry already grappling with a dwindling talent pipeline and that a push toward automation was making tens of thousands of oil workers redundant even before the coronavirus pandemic wiped out more jobs.
The industry lost more than 100,000 jobs between March and August 2020, according to the Bureau of Labor Statistics and consulting firm Deloitte (so certainly not the worst-hit sector, but hard-hit nonetheless). Even if oil demand and prices increase, not all of those jobs are likely to come back, said Ken Medlock, senior director of the Center for Energy Studies at Rice University’s Baker Institute for Public Policy.
That’s because it’s not just the pandemic that’s hurting the industry. Other factors are cutting down the oil and gas workforce as well.
First, as with most industries, there’s automation, which has reduced the number of jobs available in the energy sector over the last several years. When oil prices crashed in 2014, the Houston area shed some 86,000 oil and gas jobs and by 2019 had regained only 24,400 of those jobs. Why? In large part because in the wake of the crash, oil companies became more efficient and began to embrace automation in a big way.
“The automation trend has continued,” Medlock said. “So when production grew again from 2017 to 2019, that growth didn’t require a lot of additional labor input.”
Throw global trends toward electrification and clean energy into the mix and the job market wasn’t looking that rosy for oil and gas even before the pandemic.
“If you’re a 30-year-old graduating with an MBA and you want to stay in Houston and you want to be in energy, you’re taking a very different look than you would have 10 years ago.”
And even if the job demand does rebound to any extent, between policy and economic shifts and dwindling social approval of the industry, oil companies may find themselves struggling to hire.
As fossil fuels flag, all signs point to a strong future for renewable energy.
“Looking at global investments in the energy space, it’s all going to wind, solar, batteries, EVs [electrical vehicles]. It’s not going into fossil fuels,” said Jeff Bishop, CEO of the large-scale battery company Key Capture Energy. “Fossil fuels aren’t going away, don’t get me wrong, especially not in Texas. But if you’re a 30-year-old graduating with an MBA and you want to stay in Houston and you want to be in energy, you’re taking a very different look than you would have 10 years ago.”
Last week — a century ago by 2021 standards — social media lit up with various opinions about a New York Times story that highlighted the waning fortunes of new college graduates looking to work in the oil and gas industry. Some sympathized with young people graduating into a pandemic, but most wondered why they had chosen to work in the industry in the first place, given what we know about both its impact on climate change and its financial prospects in years to come.
But actually, Bishop and Medlock believe the changing energy landscape is not such a big problem for the sorts of white-collar workers profiled by the Times, whose skills are largely transferable to any segment of the energy sector. In fact, according to Bishop, it’s a boon to clean energy startups like his to be able to hire oil and gas workers.
“I can teach people power, but I can’t teach people the process, procedures and mindset for these big energy projects,” he said. “Just in Texas alone, we’re putting over $100 million of capital to work and we need a level of rigor around project management, safety and process that oil and gas companies are really good at.”
His company specifically recruits current and former gas employees and recent grads who studied for oil and gas jobs.
“People call Houston the energy capital of the world, but Houston is really an engineering and logistics capital,” Medlock said. “Those skillsets — managing a supply chain, handling materials, chemical engineering — that’s all transferable.”
This is not to say that there’s a simple one-to-one transition from oil and gas jobs to clean energy jobs. The Bureau of Labor Statistics still doesn’t collect data on solar and wind jobs, so the stats that exist are cobbled together, but there are indisputably fewer jobs in clean energy than currently exist in the fossil fuel industry. And while white-collar workers can hop around the energy sector, it’s not as straightforward for the various blue-collar workers in oil and gas. Welders can work just as easily on a wind farm as an oil rig, but the skills of other oil rig workers are pretty specific to drilling.
The idea of employing out-of-work oil hands to plug and remediate abandoned oil wells has been floated a few times in recent years as a transitional job for these blue-collar workers while the economy shifts away from fossil fuels. Although oil companies are legally required to decommission out-of-use wells and drill sites, and return the land or sea to its pre-drilling condition, it’s fairly common for companies to declare bankruptcy before these asset retirement obligations (AROs) are fulfilled. Consequently, there are now an estimated 1 to 3 million abandoned wells in the U.S. in need of remediation.
Some pro-transition activists ― like Theron Horton, a strategist with the ARO Working Group ― have suggested that oil workers could be hired by the federal or state governments to perform this work as they train for new jobs.
“There’s 10 years of steady jobs for these people, not boom and bust the way it has been in the oil fields,” Horton said. “And it’s work that their skillset and identity is aligned with. Plus, it leaves them in situ — they don’t have to move, their kids stay in the same schools. Ten years is a long time to transition, so it’s really common sense convergence here. It’s also worker solidarity, for these people in the fields not to feel like they’re abandoned by society.”
But despite the number of such wells, others, like Medlock, are not convinced that such an approach would put a large enough number of people back to work.
Meanwhile, in the white-collar world, if oil prices do rebound, it’s more likely that oil companies will be chasing graduates than the other way around. The fossil fuel industry has been worried for years about the lack of interest shown by younger generations in working for oil and gas companies. Even a few years ago, young people saw careers in the industry as “difficult, dangerous and harmful to society.” Between the 2014 crash and the pandemic, now it also seems financially unstable. So even as they lay off workers in the field, oil companies continue to recruit at universities to avoid creating a “generation gap” in their workforce, a problem the industry grappled with in the 1980s.
Unlike the ’80s, oil companies these days are competing for workers with more stable and more popular industries, including clean energy.
Bishop said he’s not worried that the people he’s hired away from oil and gas will defect back to fossil fuels if prices hit $100 a barrel again.
“People want stable, well-paying jobs that have purpose,” he said, adding that he’s regularly contacted by individuals who have an oil and gas education but are interested in his firm, “especially folks coming out of business school. They know they’re gonna be in energy, and they see the writing on the wall: You need to be in the energy transition now.”
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