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Gregory Brew

Gregory Brew

Dr. Gregory Brew is a researcher and analyst based in Washington D.C. He is a fellow at the Metropolitan Society for International Affairs, and his…

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Energy Employment Surges With U.S. Shale Production

A major bright spot in the March 2017 American jobs report was the apparent recovery of the mining sector, the employment area associated with oil and gas. The report indicated that 11,000 new jobs were added in the month of March, a further sign that the years-long hemorrhaging of jobs in the energy sector has come to an end.

This report comes after February jobs’ numbers indicating oil and gas employment increased by about 1 percent. The Bureau of Labor Statistics reported that 178,700 people were employed in oil and gas in February 2017. This is the largest number recorded since May 2016, though it is still far off from the industry peak in October 2014, when over 200,000 people were employed in oil and gas.

Data: Bureau of Labor Statistics

(Click to enlarge)

Since October, thirty-five thousand new mining sector jobs have been added to the U.S. economy. This time last year, the sector was shedding jobs at a rate of eighteen-thousand per month. The turn-around comes as prices slowly edge above $50 a barrel. There are hopes that federal changes to environmental regulations, the opening up of federal land and improving price forecasts will all support a new boom in oil and gas production within the United States.

This news may help to mitigate negative reactions to reports that some industry CEOs took big pay-days during the energy downturn that hit the U.S. oil and gas industry hard between 2014 and 2016. As their companies filed for bankruptcy, the chief executives of Ultra Petroleum, Seventy Seven Energy and other firms have taken large stock packages and significant pay-offs.

Still, the jobs report is good news for the domestic energy sector. Hiring in oil field services is ticking up, as Houston-based Halliburton announced plans to hire two-thousand workers for pressure pumping and cementing in the U.S. The Houston Chronicle has reported an increase in job postings tied to energy and manufacturing. The increase is tied to the growing activity in the Permian Basin and the rising U.S. rig count, now at 943 according to Baker Hughes.

The Bakken shale field, which has suffered from a drop in investment and some concerns about long-term viability, has recovered as hiring increases and employers search to fill openings. A year after expectations in the Bakken and Niobara plays, speakers at an industry conference in Denver struck a note of optimism. Related: Oil Heads Higher As Iran And Saudi Arabia Draw On Reserves

This comes as U.S. oil exports rise, reaching a record 31.2 million barrels in February 2017. OPEC production cuts, intended to bring up prices, had the knock-on effect of kick-starting US production and fueling a current surge in exports. China has now turned to added U.S. production to replace the drop in OPEC crude, and purchased more than 8 million barrels from American producers in February.

But this current surge in exports is likely to be temporary. American exports of natural gas, which have also been growing, are highly dependent on factors governing trends in the global LNG trade. That may worry industry optimists who hope for a strong recovery after a downturn that rivaled the energy depression of the mid-1980s.

While many firms went bankrupt as prices fell, other companies stayed on-line through improved efficiency, cost-cutting and automation. Upstream actors and oil service companies cut jobs through automation, allowing them to stay in business. Now, with prices ticking back up and demand improving, it’s possible that many of the old energy jobs are gone for good, replaced by automated methods or rendered obsolete by changing technology. Related: U.S. Threatens OPEC As Oil Exports Hit Record High

There are also concerns that changes to the Jones Act proposed by the Customs and Border Protection Agency relating to off-shore activity would seriously impact job growth in those areas. The American Petroleum Institute has estimated that enforcement changes changing the definition of “vessel equipment” in the CBP’s protocol, would cut 30,000 jobs in the Gulf of Mexico, with a total of 125,000 jobs lost by 2030.

For job gains to hold, prices will have to continue improving while demand for U.S. oil and gas abroad grows. That may happen if the federal government stands by its pledge to boost American energy “independence” and increased production by encouraging investment, approving new pipelines and opening up more federal land for exploration and drilling. In the meantime, proponents of renewable energy can take heart in the fact that solar and wind power continue to add jobs nationwide at a faster rate than oil, gas or coal.

By Gregory Brew for Oilprice.com

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