A career in oil used to be an attractive option for college students and high school grads alike. Oil and gas was one of the few industries where one could make six figures a year without a college diploma. And those with a diploma? They made high six figures with all sorts of perks and benefits.
Those days are gone.
During the last oil crisis, between 2014 and 2016, a few hundred thousand jobs were lost in the industry globally as oil companies were forced to shrink their exploration and production activities. Now we are seeing a repeat of that same scenario: frac crews in the U.S. shale patch are being dismissed because companies are suspending all new drilling and shutting in operating wells. Industry majors are revoking internship proposals. Oil and gas is once again viewed as a poor career choice.
Notably, this dramatic change is taking place just months after a new trend emerged in oil and gas hiring: the digital shift, one might call it. Focused on a digital transformation aimed to streamline and improve their operations while maintaining cost control, oil and gas companies began hiring more information technology professionals. It was time to go digital, and oil was going digital all the way.
But there was a second reason for this change in hiring trends: many market researchers were warning the oil industry was facing a talent crisis as fewer young people picked engineering majors at university. That, in turn, was a result of both the 2014-2016 crisis and the bad rap the industry has drawn over the past few years concerning its carbon footprint and climate change contribution.
The problem was real: last year EY conducted a survey that revealed that half of the Society of Petroleum Engineers' members were over 55, while the number of high school grads choosing to continue in any of the engineering university majors that could lead to a career in oil was falling. Related: Is The Tesla Bubble About To Burst?
There was a gap opening up with no one to fill it.
The gap was wide, at 25,000 people over six years, according to data from energy training and standardization organization OPITO. That was how many new recruits the global oil industry would need to hire by 2025. Now, this gap has suddenly vanished because few can afford to look five years ahead.
AFP wrote this month how roughnecks who were laid off because of the crisis are facing a dilemma of whether to retrench and wait out the crisis or seek employment elsewhere in a less cyclical industry. The latter choice would present the industry with a challenge if and when prices recover to the extent that would make a return to production growth profitable.
It would reopen the gap mentioned above.
Meanwhile, Bloomberg reports, as oil companies pull out their internship offers, university students are finding careers elsewhere. Hiring in the energy and mining sectors, Bloomberg notes, was down 14.3 percent on the year in March, when the crisis was in its infancy. A month later, the trend has likely accelerated, and this could mean a permanent loss of talent for the industry.
What reinforces this expectation is the fact that unlike other crises, this one isn't likely to wrap up anytime soon. This time, it's not just a temporary imbalance between supply and demand--it's a demand slump brought about by external factors coupled with a massive supply overhang. Clearing this will take more than a couple of months, even if we are already starting to see some early signs of a pickup in gasoline demand in the United States and China, for example. Related: Trump’s Corn Crisis Is Back
Meanwhile--and unfortunately for the oil industry--many laid-off roughnecks will have success finding employment in another industry. University grads, too, will find internships and consequent recruitment in companies that are not victims of the whims of the most volatile commodity market in the world.
And that talent gap will open up again. Could digitalization close it?
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Digitalization is increasingly beginning to look like the industry's only chance, not just after this crisis but over the long term. Automation and digitalization will create a new sort of workforce for the oil industry that wouldn't be so vulnerable to oil price swings. That's because the greater use of technology in the field would complement rather than replace human work, Baker Hughes' VP of Ventures and Growth told Oilprice in an interview earlier this year. Taylor Shinn then explained that the workforce of tomorrow would also be easily retrainable depending on the specific needs of employers at any given time. The easier an employee can be retrained, the more secure their job is; it's as simple as that.
One thing seems to be certain in these uncertain times for oil and gas. Fewer and fewer young people will be choosing an oil-related degree. After two crises in just five years, chances are the mistrust will lodge deep, and even high six figures would not be enough to convince more people to pursue an oil-related degree. But this is not a crisis. It's a significant shift in attitudes that could have severe repercussions across the industry. And it seems unstoppable.
By Irina Slav for Oilprice.com
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