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O&G about 4% of Alaska’s payroll jobs Labor department economist Neal Fried says this is only producers, oilfield service companies; other direct O&G jobs not counted Kristen Nelson Petroleum News
Concern over lost jobs related to oil and gas in Alaska has been a major driver in discussions about whether changes need to be made in the current production tax, Alaska’s Clear and Equitable Share, ACES.
Economist Neal Fried, with the Research Section of the Alaska Department of Labor and Workforce Development, talked to an Alaska Support Industry Alliance meeting April 28 about the information the department has and how it uses that information to analyze changes in employment.
As the department counts people getting a paycheck in Alaska in the oil and gas industry, it’s about 4 percent of payroll employment in the state, Fried said. That payroll employment excludes the self-employed — with fish harvesters representing the largest group of self-employed — and the uniformed military.
Because those direct oil and gas jobs are on average the highest-paying in the state, the payroll dollars are more than 4 percent, he said, probably more in the 6-7 percent range.
That 4 percent figure comes from quarterly reports employers submit when paying unemployment insurance and hasn’t changed much in the last decade.
It reflects a narrow definition of oil and gas employment — those working for companies that are oil and gas producers, such as BP and ConocoPhillips, or oilfield service companies such as ASRC Energy Services and Doyon Drilling.
Employment not counted as oil and gas It is harder to identify employment which is directly in the oil patch, but is not counted as oil and gas, because the employer is, for example, in transportation or safety, Fried said.
He acknowledged that “lots of people that are working directly in the oil patch” are not counted as oil and gas, “so in that sense we know that this (4 percent figure) represents only a small part of those people that are directly employed in the oil patch.”
In addition, there are people who work indirectly in the oil and gas industry.
Fried said the department periodically asks companies what they do and employment figures are counted according to how a company describes most of its work. If a company reports that 80 percent of its work is oil and gas related, it would be counted as oil and gas.
He said the department doesn’t have employment figures that separate out exploration, development and maintenance. People are looking for that information, he said, but didn’t know if they’ve found it.
Economic impact Then there is the impact of the industry on Alaska’s economy.
Fried said everyone understands that impact is larger than the 4 percent that shows up as direct oil and gas employment.
He used a breakdown developed by the University of Alaska Anchorage Institute of Social and Economic Research to illustrate this point: ISER’s work has the economic impact of the federal government topping the list at 36 percent, followed by oil at 30 percent, tourism at 11 percent, seafood at 10 percent, personal assets at 5 percent, mining at 3 percent, air cargo at 2 percent, timber at 2 percent and other at 1 percent.
The state’s gross product, the value of all goods and services produced in Alaska, as analyzed by the U.S. Department of Commerce, Bureau of Economic Analysis in 2008, puts oil and gas at the top at 25 percent followed by government at 17 percent, transportation and utilities at 12 percent, financial at 11 percent, with all other categories in the single digits.
Sixty-six percent of oil and gas jobs (producers and oilfield service companies) are on the North Slope; 21 percent are in Anchorage; 9 percent are on the Kenai Peninsula; and 5 percent are in the rest of the state, Fried said, although people who hold these oil patch jobs live across the state.
The North Slope isn’t a useful way to look at oil and gas jobs, he said, because it includes non-oil and gas employment in Barrow and other communities, but looking just at the Prudhoe-Kuparuk-Alpine area provides a breakout of 65 percent oil services, 18 percent oil producers and 17 percent other industries, Fried said, “whether it’s transportation, construction and other players that are there physically on the North Slope working in the oil fields.”
Employment rates Looking at recent changes in oil and gas employment, Fried said direct oil and gas employment, operators and oilfield services, began to increase in 2006 and has held steady at about the same level for the last three years.
The jobs increase in 2006 and 2007 was driven by the 2006 Prudhoe Bay oil spill and the corrosion work which followed, he said: “We know that that turbocharged these numbers.”
Fried said the department cannot break out employment numbers by maintenance, development or exploration because it doesn’t have the information to do that.
“Let’s face it — most of those oilfield service companies are doing all three,” he said, while the largest oil employer in Alaska, ASRC Energy Services, “does all that kind of work and probably even other work.”
It’s very hard to break it out, he said, because employers don’t tell the department what they’re doing, they just report their employment.
Fried said monthly employment figures show to some degree “how much volatility goes on month to month and year to year in the oil industry,” compared to annual figures which look smooth.
In 2009, for example, oil and gas employment started at 13,420 and by November had dropped to a little less than 12,000.
“That’s a loss of almost 1,500 jobs in the course of a year,” he said.
The numbers stayed low and then started coming up again.
And 2006 monthly figures, Fried said, show “the big ramping up that’s going on with that oil spill and the corrosion, too,” with employment starting at about 9,300 and ending the year at almost 11,000.
Unemployment claims Looking at unemployment claimants with previous employment in the oil industry, between 2008 and 2009 claims doubled.
“All claimants also increased.
“Just remember,” Fried said, “that 2009 was the first year in Alaska’s economy in 21 years where employment actually fell. The job market went from a very good job market in 2007 and ’08 to a lousy one in 2009, even in Alaska.”
In the course of 2009 the number of direct oil and gas jobs fell by 1,500 and a lot of those folks applied to collect unemployment.
Fried said that another thing that happened is that people in Alaska who work in the oil patch and construction and related jobs, can work in different industries over the course of two or three years, but “there weren’t that many alternatives in 2009.”
On the producers’ side, oil and gas extraction, “employment is very stable and has been for many years now,” Fried said.
“The volatility is all in the oilfield service companies … activities for drilling, exploration — that’s where the numbers change, or with the contractors.”
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