Rising oil and gas production in the U.S. shale patch is expected to bring higher wages for workers in the sector as companies need to attract more labor in an already tight market, energy research firm Rystad Energy says.
Wages are set to grow through the end of 2024, due to the tight labor market, retirements in the industry, and competition from clean energy jobs, Rystad Energy said in a new report quoted by the Journal of Petroleum Technology.
Average wage growth is expected at 2.5% and 7.2% in 2023 and 2024. Wages have already grown in the key shale basins, including the Permian, the Eagle Ford, Haynesville, Williston, and Appalachia, according to Rystad Energy. Those areas saw on average over 9% growth in wages in 2022.
The growth in wages has increased the budgets of the operators in the shale patch and contributed to cost inflation.
According to the Dallas Fed Energy Survey for the first quarter, executives at Permian operators saw oil and gas expansion stall amid surging costs and worsening outlooks.
The aggregate wages and benefits index edged higher, to 43.6 from 40.2, according to the survey.
Asked about what changes they expect in the workforce at their company from December 2022 to December 2023, more than half of the executives — 55% —expect their headcount to remain unchanged from December 2022 to December 2023. However, 37% of executives expect the number of employees to increase, of which 4% expect a significant increase and 33% anticipate a slight increase. Only 8% anticipate the number of employees decreasing over the period, according to the survey.
Whereas the most-selected response among E&P firms was for employment to “remain the same” in 2023, the most-selected response of support service firms was for employment to “increase slightly” in 2023, the poll found.
One executive at a services firm said in comments to the survey, “Regulatory uncertainty is a major overhang. Labor remains tight, with continued wage pressures. Supply-chain issues remain.”
By Tsvetana Paraskova for Oilprice.com
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No amount of hype by the likes of the US Energy Information Administration (EIA), the IEA and Rystad Energy could change this fact.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert