Is the Worst Over for OFS Job Losses?
U.S. oilfield services and equipment (OFS) employment increased for the second consecutive month in October, adding 6,430 jobs, the Petroleum Equipment & Services Association (PESA) reported Monday, citing preliminary data from the federal Bureau of Labor Statistics (BLS).
On a broader level, the U.S. economy gained 638,000 jobs in October and the unemployment rate fell to 6.9 percent, PESA observed in a written statement.
According to PESA, October’s 6,430-job increase represents a one-percent gain in the sector’s headcount and stems from an early uptick in oil and gas production activity. The October OFS employment gain is considerably higher than September’s addition of 2,202 jobs in the sector, based on BLS revisions, noted PESA. In August, BLS data show that OFS employment declined by 1,187 jobs.
“While the worst of the cutbacks appear to be behind the industry, the outlook remains uncertain because a resurgence in COVID-19 cases could suppress demand and derail economic recovery,” PESA stated.
To be sure, pharmaceuticals giant Pfizer (NYSE: PFE) on Monday revealed progress in developing a COVID-19 vaccine. Distributing an effective vaccine would be bullish for the oil market, and West Texas Intermediate and Brent crude prices posted their largest one-day gains since May. A Rystad Energy analyst market-watcher has cautioned, however, that the gradual nature of rolling out a vaccine should quickly erase Monday’s “‘violently positive’” price action.
Houston-based PESA pointed out that its monthly Oilfield Services and Equipment Report estimates 92,302 jobs have been lost as a result of pandemic-related demand destruction. PESA added that OFS sector employment dropped by 101,087 jobs from Oct. 2019 to Oct. 2020. It noted the 13.2-percent year-over-year decline – from 766,301 to 665,214 jobs – equates to approximately $12.7 billion in lost annual wages.
PESA, collaborating with researchers from the Hobby School of Public Affairs at the University of Houston, estimates that BLS data show a 12.2-percent overall decline in U.S. OFS sector jobs since early this year: from 757,516 in February to 665,214 in October. OFS job losses were heaviest in April of this year, totaling 58,738, PESA added.
OFS companies showing the greatest job losses are those providing support services for oil and gas extraction, which cut 77,522 jobs – 83 percent of total OFS losses – during the pandemic, PESA stated.
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