Coronavirus pandemic leads to massive job loss in energy, from oil and gas to renewables
Energize Weekly, June 24, 2020
Energy jobs – from oil and gas rigs to rooftop solar installations – continue to plummet under the weight of low oil prices and the novel coronavirus pandemic.
In May, 27,000 additional clean energy workers filed unemployment claims, bringing the total job loss in the sector to 621,000 since March, according to an analysis done by BW Research for the business advocacy group, Environmental Entrepreneurs or E2.
At the same time, the U.S. oil and gas market has been among the most severely hit in the world by the pandemic’s disease – COVID-19 – losing more than 100,00 jobs, according to Oslo-based industry consultant Rystad Energy.
The employment cuts have been geographically concentrated. Texas saw 45,000 oil and gas jobs lost and nearly 33,000 clean energy jobs cut.
The biggest loss in clean energy jobs has been in California with almost 110,000 positions gone. California and Texas along with Florida, 32,000 jobs cut, and Michigan, 31,000 jobs lost, account for a third of all clean energy job reductions.
Louisiana is also facing at least a 25 percent cut in its 33,900 oil and gas jobs, according to the Louisiana Oil & Gas Association (LOGA).
“Our members have indicated they’ve already been forced to lay off 23 percent of their workforce, and the large majority are now taking steps to shut-in production,” LOGA President Gifford Briggs said in May.
As well as geographic concentration, the job losses have also been concentrated in particular areas of activity.
The overall 621,000 cut in clean energy jobs represents an 18.5 percent decline in the workforce and is more than double the clean energy jobs created since 2017.
Energy efficiency, the biggest clean energy jobs sector, has seen the biggest decline with a loss of 432,000 jobs since March. In May, 18,900 energy efficiency jobs were lost, equal to seven out of every 10 jobs cut in the clean energy sector.
Renewables have seen 99,717 jobs lost since March and 4,300 jobs lost in May. The third largest reduction in workforce came in clean vehicles with 2,000 jobs cut in May and 49,000 since March.
Those three sectors – energy efficiency, renewables and clean vehicles – account for 91 percent of all clean energy jobs lost.
In the oil and gas industry, the biggest job losses came in support activities for oil and gas operations, which posed a 19 percent drop equal to 44,550 jobs. Another 16,000 jobs, a 7 percent decline, were cut from pipeline and related construction.
“The support activities segment in particular reveals a staggering employment slump of 20 percent compared to February’s pre-COVID-19 levels,” the Rystad Energy analysis of U.S. Bureau of Labor Statistics said.
There was a loss of 13,450 workers, or 17 percent, in oil and gas well drilling and 9,600 jobs cut from oil and gas extraction, 6 percent.
“Overall, the impact of the job cuts would be greater for the oilfield services (OFS) sector than for exploration and production companies,” Matthew Fitzsimmons, Rystad Energy’s vice president for energy research, said in a statement. “OFS companies are likely to see more than 20 percent of its shale, onshore and offshore workforce combined cut by the downturn. While other industries have started to see labor, demand embark on a road to recovery, oil and gas workers will have to wait longer for demand to increase.”
The oil market, which was hit by a brief price war between Saudi Arabia and Russia and then faced depressed demand as a result of the pandemic, has made a small recovery, according to the International Energy Agency (IEA). Not that it will offer much relief to industry employment.
The agency in its June market analysis raised its forecast for 2020 oil demand by nearly 500,000 barrels a day to 91.7 million barrels a day. This still represents an 8.1 million barrels a day drop over 2019 demand. It is the largest year-on-year decline in history.
“While the oil market remains fragile, the recent modest recovery in prices suggests that the first half of 2020 is ending on a more optimistic note,” the IEA said. “New data show that demand destruction in the early part of the year was slightly less than expected, although still unprecedented.”