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Oil industry job count drops sharply
The COVID-19 pandemic and associated crash in the oil price have driven the Alaska job count to its lowest level for decades Alan Bailey for Petroleum News
Data from the Alaska Department of Labor and Workforce Development indicate that the number of oil industry jobs in Alaska has dropped sharply as a consequence of the COVID-19 pandemic and the associated fall in the price of oil. In March of this year the job count stood at 10,000. By September the count had fallen to 6,900, the lowest number in several decades. The fall was particularly sharp between March and May, as the pandemic hit the oil market, and then continued at a slower rate in the succeeding months. The ADLWD data only includes jobs in companies that are oil producers or oilfield service companies - it does not include other jobs that also serve the oil industry.
Long-term trends A plot of oil industry employment levels over the past couple of decades shows that employment levels have fluctuated quite a bit over the years, although this most recent job decline has been particularly sharp. There was also a steep decline in 2015 and 2016, followed by a modest recovery in 2018 and 2019, following the collapse in the oil price in 2014. Another downward trend in the early 2000s was followed by a steady upward climb in succeeding years.
Given the many unknowns about the future of the current pandemic and the global oil market, it is difficult to speculate on where Alaska oil industry employment will trend from this point. There are some new development projects and potential exploration projects on the horizon. But much depends on future oil demand and price levels.
Comments from the state An article in the June edition of ADLWD’s Alaska Economic Trends publication reflected on the impact of the pandemic on oil industry employment levels at that time. The article commented that, even before the pandemic hit, new technologies had been reducing labor costs, while the industry had also been experiencing the impacts of long-term oil production declines. On the other hand, the long-term determinant of employment levels does appear to be the oil price, the article said.
And, in the case of this latest employment decline, production had never fallen so hard or so fast, and prices had never fallen so low, the article said. At one point in April the price of West Texas Intermediate even fell briefly into negative territory, as oil demand collapsed and the market became flooded with oil that was difficult to sell. The article suggested that, given the high levels of uncertainty in the market, oil industry employment levels could remain low for an extended period of time.
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