Job losses among oil and gas workers in Texas, resulting from sustained low oil and gas prices, could be even more severe than initial grim estimates indicate, an economist who tracks the energy industry in the Lone Star State said this week.
Karr Ingham, who prepares the Texas Petro Index for the Texas Alliance of Energy producers, said in a statement that the Texas Workforce Commission reported that through September the upstream oil and gas industry has lost about 30,000 jobs since employment in the sector peaked last December at 305,000 jobs.
But, Ingham cautioned that actual job losses in the sector could far exceed the estimate he develops each month for the TPI, if a different TWC data set proves to be accurate.
"We use two data sets from the TWC's Current Employment Statistics series in calculating the TPI, because it is monthly and timely and reflects the industry standard for reporting monthly employment data," Ingham said.
Although the CES data shows a loss of about 10% of all E&P jobs in the state in the first nine months of the year, "it appears to be inaccurate when compared to the TWC's Quarterly Census of Employment and Wages, which measures jobs at the county level and sums up by industry," he said.
According to the most recent QCEW estimate, upstream oil and gas employment totaled 258,200 as of the end of the second quarter of 2015, down about 47,800 jobs from employment of 306,000 indicated by the QCEW at the end of fourth-quarter 2014.
This represents a loss of about 13% of jobs over the first half of the year, compared with a 10% job loss over the first nine months of the year as indicated by the other data set.
"The loss of nearly 48,000 jobs in just six months is staggering, and again, that only represents industry employment loss through the second quarter of this year," Ingham said.
He added that although the TWC has not yet reported QCEW data through the third quarter, "It is certain that job losses have continued."
Extrapolating from the QCEW estimate at the end of second quarter, Ingham said a conservative estimate would place upstream oil and gas job losses at 56,000.
"When the upstream oil and gas economy in Texas entered into the current contraction, we estimated jobs lost over the length of the downturn could total 40,000-50,000 jobs," Ingham said. "We now appear to be well beyond that estimate, and the end is not is sight."
RISING STOCKS
Recent supply and demand trends reported by the US Energy Information Administration indicate that things are not likely to improve for Texas oil and gas producers any time soon, Alex Mills, president of the Texas Alliance, said in an interview Friday.
"According to the recent numbers that came out from the EIA this week, the crude inventory had increased again and that is not good news at all," he said.
On Thursday, the EIA said US crude stocks rose 4.2 million barrels to 487.034 million barrels in the week ended November 6.
Industry observers had been hoping that low prices of gasoline and diesel fuel over the summer "would create more usage by the public and use all the crude that we have in stock," Mills said. "It hasn't happened."
Mills added that as producers cut back on their drilling in the wake of low prices, this will eventually have the effect of lowering production, and with tightening supplies, oil and gas prices ultimately will increase. But he said he does not expect this scenario to play out over the near term.
"Not many people are optimistic about it happening in 2016," he said. "The first half of 2016 is going to be even tougher than 2015. More people are taking that into consideration."
As an indicator of potential future supply-demand trends for crude oil, Mills pointed to the supply-demand picture for natural gas, which has seen a downturn in prices since 2008.
"If you look at the numbers of EIA we still have a surplus of natural gas," he said. "That's great for the consumer but not so good for the oil and gas industry."
