HOUSTON – Rising crude prices could spur hiring across the Texas oil patch by August, a regional economist says, beginning a slow but steady reversal in the state’s energy employment after struggling drillers shed 1 in 3 jobs.
Over the past two months, a dozen U.S. oil companies — including Devon Energy and Pioneer Natural Resources — have announced plans to plow an extra $600 million into their shale fields in Texas and elsewhere as crude prices hover near $50 a barrel. Several have dispatched new rigs and received drilling permits.
Next, they’ll start hiring new people – unless, of course, the financial turmoil after the United Kingdom’s vote to leave the European Union spreads to Britain’s global trading partners and chills energy demand growth.
“We’ve endured this chaos for two years now,” said Karr Ingham, a Texas oil economist based in Amarillo. “It seems like we’re getting to the end of the tunnel. We’re finally seeing the fruits of all these terrible things that have happened.”
According to Ingham’s latest estimate, the oil bust has cost Texas more than 100,000 jobs in oil production and services, a third of the state’s oil production workforce and virtually all of the upstream jobs added in Texas after the shale oil boom began in 2010.
Rehiring drilling crews, geologists and engineers will take time, likely beginning some six months after crude prices hit bottom at $26 a barrel in February. But as drilling becomes more efficient, the industry probably won’t regain every job it cut.
From a financial standpoint, it’s a lot easier for companies to make the decision to cut jobs than add them. That’s in part because oil companies that worked to whittle drilling costs during the energy bust will be reluctant to increase their overhead again with a bigger workforce.
“The industry can attract people back to it when it needs to, but it hardly ever turns on a dime,” Ingham said, largely dismissing the possible economic side effects of Brexit. “When hiring begins, it’ll be in small numbers.”
At its peak in late 2014, the Texas oil industry had 306,000 upstream jobs, according to Ingham’s estimates. That figure fell to 205,000 in May.