LONDON Nov 1 Jobs related to oil and gas
drilling account for more than one in eight of all net new
nonfarm jobs in the United States since 2003, and almost one in
five in the private sector, according to an analysis of data
from the Bureau of Labor Statistics (BLS).
Oil and gas drilling is one of the fastest growing sectors
of employment, as near-record prices spur a massive expansion in
activity and employment.
The number of jobs related to oil and gas drilling has risen
by almost 200,000 (80 percent) since 2003, and the sector now
employs about 430,000 workers, according to BLS (Chart 1).
Over the same period, total nonfarm employment rose just
1.49 million as a result of the recession.
Oil and gas employment bounced back quickly from a short
sharp drop in the immediate aftermath of the financial crisis,
when U.S. crude prices dropped to less than $50 per barrel, and
now stands at the highest level for more than two decades.
BLS does not break out jobs in oil and gas drilling
separately. But in the earlier part of the decade, most of the
extra employment was in the gas sector, before switching to
oilfield work in recent years, as gas prices have fallen and rig
crews and support services have been redirected to focus on
liquid-rich plays (Chart 2).
Job creation correlates well with increased oil and gas
output, with U.S. crude production rising for the first time
since the mid-1980s, and gas output leaping to confound earlier
predictions of a peak (Chart 3).
Driven by surging oil prices, economist Adam Smith's
"invisible hand" is well on the way to re-allocating resources
from sectors with over-capacity (real estate, construction and
financial services) to long-neglected old economy sectors where
supply has fallen short of demand because of decades of
under-investment (oil and mining).
Past experience shows structural economic changes take time,
and are achingly slow in the early stages. But the longer prices
remain high, the more adaptation will accelerate, explaining why
oil has always been, and will remain, a cyclical industry.
Anecdotally, most of the new jobs are still comparatively
low-skilled. There are still shortages of higher skilled
construction workers and experienced engineers and scientists
for activities such as surveying, well design and project
management, putting upward pressure on wage rates and costs.
Skill shortages such as those highlighted by the Society of
Petroleum Engineers (SPE) and the National Academy of
Engineering (NAE) in surveys will continue to plague the
industry for some years. But growing demand and rising
compensation in an otherwise stagnant labour market will
eventually cure them.
In time the focus of graduate study programmes (especially
quantitative disciplines such as mathematics, physics and
engineering) will shift from training surplus "financial
engineers" into producing more petroleum engineers as both
schools and students respond to the altered pattern of salary
and career incentives.