Oil industry could lose 20,000 more jobs by midyear

Plummeting oil prices may result in 20,000 additional oil-field-related job losses in Texas by the middle of the year, double what an economist predicted earlier.

Karr Ingham, an economist who works for the Texas Alliance of Energy Producers, originally forecast that 10,000 jobs would be eliminated during the first six months of 2016.

But with oil prices plummeting, Ingham said, an additional 10,000 jobs will be lost.

U.S. crude closed Thursday at $29.53 a barrel, up $1.18, or 4.2 percent.

“It is not pretty at all. It wouldn’t have been pretty if (oil prices) had stabilized at $30. Now we are worse than that,” Ingham said. “For the first half of 2016, we will continue to suffer job losses in the industry, and 10,000 per quarter is not unthinkable.”

In November, Ingham said job losses in Texas would hit 60,000 by the end of 2015 and 70,000 by mid-2016, by which time oil prices could be in the mid-$40s per barrel.

So the oil and gas field and its related industries will lose 80,000 jobs from January 2015 to June 2016 if Ingham’s crystal ball is accurate.

Ingham bases his forecasts on two sets of data from the Texas Workforce Commission: monthly employment statistics and the agency’s quarterly census of employment and wages. He is working on his final report for 2015, which will include a forecast for this year.

It didn’t look good throughout 2015. In November, he said, monthly employment stats put job losses at 30,000 for the first 10 months of the year. But when you take into account what the census shows, which is calculated at a county level, the industry had actually slashed about 48,000 jobs between December and June, he said. By the end of October, job losses hit 56,000.

The energy industry now employs 240,000 to 250,000, far from its peak of 306,000 in December 2014, he said.

“It is safe to say at this point, moving into 2016, that we’re not anywhere near done with job losses,” Ingham said. “Oil at $20 a barrel doesn’t need as many employees.”

On Thursday, Houston-based Southwestern Energy announced it is cutting 1,100 jobs. The company had about 2,780 employees at the end of 2014, its latest publicly available head count.

The oil and natural gas company said in a government filing that it had no drilling rigs in operation to start the year and expects drilling activity to decline.

Earlier this month, the state workforce commission issued a warning notice that U.S. Steel had announced that it was eliminating about 700 jobs near Lone Star, a small town in East Texas, at a pipe-making plant for the oil and gas industry.

Noble Drilling, based near Houston, also told the state that it plans to lay off 120 workers. Noble Drilling operates offshore drilling platforms.

Both U.S. Steel and Noble said the layoffs would occur in March.

The last time oil prices were this low was in mid-2002, when the posted price — which is what producers are getting paid — was about $23 a barrel, Ingham said. The posted price this week was $23.25.

At that price in 2002, the industry employed about 130,000 people, he said.

“It was not going to be pretty at a better set of circumstances,” Ingham said. “Absolutely, it will not be pretty.”

This story was originally published January 21, 2016 at 2:47 PM with the headline "Oil industry could lose 20,000 more jobs by midyear."