As much as 70 percent of the more than 100,000 jobs lost in the U.S. oil, gas, and chemicals industries due to the pandemic may not return by the end of 2021, Deloitte said in an analysis on Monday.
Since the previous oil price crash of 2014, employment in the oil, gas, and chemical sectors (OG&C) has become much more sensitive to changes in crude oil prices due to the short-cycle investment and production in the U.S. shale patch, Deloitte noted.
"Our multivariate statistical analysis on employment and market data suggests that as much as 70% of jobs lost during the pandemic may not come back by the end of 2021 in a consensus business-as-usual scenario," Deloitte analysts led by Duane Dickson, US Oil, Gas & Chemicals leader, wrote in the analysis.
According to Deloitte's analysis of U.S. Bureau of Labor Statistics data, the OG&C industry laid off about 107,000 workers between March and August 2020, apart from widespread furloughs and pay cuts. The lay-offs were the fastest in the industry due to the economic slowdown and the oil price crash in the COVID-19 pandemic.
In a business-as-usual scenario for 2021, with oil prices at $45 a barrel and natural gas prices at $2.5/MMBtu, 70 percent of OG&C jobs lost during the pandemic may not come back by the end of 2021, Deloitte said.
In a pessimistic scenario with oil at $35 per barrel and natural gas at $2/MMBtu, the rate of recovery in jobs would be only 3 percent by the end of 2021, the analysis showed.
In the U.S. oilfield services sector, job losses slowed in August, at 2,600 jobs lost, the latest monthly report of the Petroleum Equipment & Services Association (PESA) showed. Still, total job losses due to pandemic-related demand destruction reached 103,420 in August, with oilfield services employment down more than 121,000 jobs since August 2019 and at its lowest point since March 2017, according to PESA estimates.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More