American energy jobs drop 6.5% Oct. to April

States heavily dependent on American energy jobs – like Texas – still have low unemployment

Producers and service companies shed American energy jobs, but the unemployment rate still dropped in Texas thanks to its resilient economy, according to the US Energy Information Administration.

American energy jobs

Texas lost oil and gas jobs, but made up for the losses in other areas.

Employment in oil and natural gas extraction and support activities in the United States reached nearly 538,000 in October 2014, but then declined by about 35,000 jobs, or 6.5%, over the following six months, through April 2015, according to data from the U.S. Bureau of Labor Statistics (BLS). The count of drilling rigs in the United States, as measured by Baker Hughes, totaled 857 for the week ending June 19, 54% below the same point a year ago and the lowest level in nearly six years.

Although unemployment rates for states that are heavily dependent on resources production remain well below the national average, the effects of reductions in oil and natural gas jobs are different in key states.

In Texas, where many reported reductions in oil and natural gas jobs occurred, the unemployment rate actually decreased from 4.7% in October 2014 to 4.1% in May 2015, because of offsetting growth in other areas of its more diverse economy.

American energy jobs

American companies need to be ready when energy prices recover.

In oil-rich North Dakota, the unemployment rate slightly increased from 2.8% in October 2014 to 3.1% in May 2015, and Nebraska has replaced North Dakota as the state with the lowest unemployment rate. Oklahoma’s unemployment rate also increased slightly from 4.1% to 4.3% in that period.

Declines in oil and natural gas extraction and support employment tend to lag declines in crude oil prices.

As prices of North Sea Brent crude oil fell from their June 2014 level of $112 per barrel, firms reduced the number of new wells drilled and the associated workforce.

Declines in production jobs lag oil price declines.

In July 2008, Brent crude oil reached a record-high monthly spot price of $133 per barrel, before falling to $43 per barrel by February 2009. Oil and gas production jobs reached a high of 391,000 in September 2008, two months after the oil prices had started declining. Employment in drilling, extraction, and support activities then continued to decline for 13 months, when the number of production jobs dropped by more than 51,000.

Most (82%) of the decline in these jobs occurred after oil prices reached the lowest monthly level and were on the rise.

 

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