Author: Mike Cline, T/X Resources
For anyone who experienced the fluctuations in the oil business during the last 30 years or so, the descriptive “roller coaster ride” in the title only partly explains our adventures.
At the time of the hiring peak of the oil industry—December 1981—there were nearly 1.18 million people employed in the mining industry (a Bureau of Labor Statistics category which includes the oil industry), as seen on the blue employee graph in the image below (generated with Golden Software’s Grapher program).
Oil prices had just peaked at $34.59 per barrel (average monthly price) nine months earlier, but it was still selling at nearly $31 per barrel that December. During the same time period however, March to December 1981, industry unemployment had crept up to 7.5 percent, from just 4.4 percent (black graph in the image below)—an increasing trend that went unappreciated by most of us at the time.
See the larger Adobe Reader pdf file.
By May 1983, the industry unemployment rate had risen to an astounding 20.7 percent (Houston was probably higher). Over 275,000 people had been “downsized” (a common euphemism of the time) in less than a year and a half from the peak!
By July 1986, oil prices had sunk to just over $9 per barrel. From there, we just continued a seemingly, never-ending decline in the industry employment figures, helped along by several additional layoff “spurts”, to the low point of slightly below 498,000 in April 2003—a nearly 58 percent reduction from the peak employment figure!
Today, oil prices are doing extremely well, having recently spiked to just over $100 per barrel. The number of people presently employed in the mining industry category is also steadily improving from the low point, to just over 675,000. Meanwhile, the unemployment rate is currently at 3.4 percent, up from a low of only 1.3 percent in October 2007.
Circumstances seem oddly reminiscent of the the time just before the peak period of the early 1980’s, which to me would make it seem like we have almost come full circle. I say this because recently there has been mention of the possibility of $200 oil, and new startup companies are having investor money being thrown at them, just so they can get a piece of the action. Search firms are again calling us on a regular basis, and people are leaving companies left and right for much, much better pay—suddenly, it seems geoscientists are back in style again. All of this makes me wonder if we are getting ready to go on another roller coaster ride before too long?
I hope not……
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