Plummeting oil prices may result in 20,000 additional oil field-related job losses in Texas by the middle of the year, double what an economist predicted earlier.
Karr Ingham, an Amarillo-based economist who works for the Texas Alliance of Energy Producers, originally forecast that 10,000 jobs would be eliminated during the first six months of 2016. But now Ingham said an additional 10,000 jobs will be lost.
“It is not pretty at all. It wouldn’t have been pretty if [oil prices] had stabilized at $30. Now we are worse than that,” Ingham said. “For the first half of 2016, we will continue to suffer job losses in the industry and 10,000 per quarter is not unthinkable.”
Oil has dropped about 20 percent this year already, though prices rebounded on Thursday from the lowest point in more than 12 years. U.S. crude gained $1.18 to close at $29.53 a barrel.
In November, Ingham said that job losses in Texas would hit 60,000 by the end of 2015 and 70,000 by mid-2016 if oil prices rose to the mid-$40 range, which he said would stop the rig count and job declines.
So the oil and gas field and its related industries will lose 80,000 jobs from January 2015 to June 2016, if Ingham’s crystal ball is accurate.
Ingham bases his forecasts on two sets of data from the Texas Workforce Commission: monthly employment statistics along with the agency’s quarterly census of employment and wages. He is currently working on his final report for 2015, which will include a forecast for this year.
It didn’t look good throughout 2015. In November, he said, monthly employment stats put job losses at 30,000 for the first 10 months of the year. But when you take into account what the census shows, which is calculated at a county level, the industry had actually slashed about 48,000 jobs between December and June, he said. By the end of October, job losses hit 56,000.
The energy industry now employs 240,000 to 250,000, far from its peak of 306,000 in December 2014, he said.
“It is safe to say at this point, moving into 2016, that we’re not anywhere near done with job losses,” Ingham said. “Oil at $20 a barrel doesn’t need as many employees.”
Soon after Ingham made his prediction, Southwestern Energy on Thursday announced in a filing with the Securities and Exchange Commission that it is cutting 1,100 jobs because of “anticipated lower drilling activity.” Southwestern Energy, one of the nation’s largest producers of natural gas, said it had no drilling rigs in operation at this time but that it had not completed its plans for 2016.
Earlier this month, the state workforce commission issued a warning notice that US Steel planned to eliminate about 700 jobs at a pipe-making plant for the oil and gas industry that is located near Lone Star, a small town in East Texas.
Noble Drilling based in Sugar Land also told the state that it plans to layoff 120 workers. Noble Drilling operates off-shore drilling platforms. Both US Steel and Noble said the layoffs would occur in March.
The last time oil prices were this low was in mid 2002 when the posted price — which is what producers are getting paid — was about $23 a barrel, Ingham said. The posted price Wednesday was $23.25.
At that price point in 2002, the industry employed about 130,000 people, he said.
“It was not going to be pretty at a better set of circumstances. Absolutely, it will not be pretty,” Ingham said.