Higher Oil Prices Don't Equal Increase in Hiring ... Yet
In recent months, the oil and gas industry has seen the price of crude oil rise to around $50 per barrel and it’s left many speculating on whether we’ll see a spike in employment as well.
Not so fast, says Texas economist Karr Ingham.
Data from the Texas Petro Index (TPI) this month showed that unemployment continues to rise (100,000 upstream jobs have been lost) despite crude oil price increases and the increased number of drilling rigs operating in Texas in June.
“Unemployment will probably continue to increase because there’s always a lag time of several months” after everything bottoms out, Ingham, who created and maintains the TPI, told Rigzone. “Industry employment typically responds within a six-month time frame ... let’s assume February 2016 ends up being the bottom in terms of crude oil pricing and that prices remain relatively simulative. If we were to date six months after that, we’re looking at August.”
Ingham added that companies are not going to be so quick to assume employment costs again after they’ve gone through the pain of eliminating costs through workforce reductions – even with $50 oil.
“This is going to be a long process before we start to add a significant number of jobs to the upstream oil and gas sector in Texas,” Ingham said. “We’ll continue to see job losses for the next few months, but by August, I hope it stabilizes and we stop losing oilfield jobs on a monthly basis. Will it be a resurgence of hiring? No. It will be slow.”
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