Texas Oil and Gas Sector Faces Job Losses Amidst Price Fluctuations

What's Happening?

The Texas oil and gas industry has experienced a significant reduction in employment over the summer, with nearly 3,000 upstream workers losing their jobs in June and July. This represents about 1.5% of the sector's workforce, according to the Texas Workforce Commission. The job losses are attributed to crude oil prices hovering just above break-even levels and abundant global supplies. The industry is facing challenges such as a downward trend in crude oil prices, unbalanced global supply and demand, a volatile investment market, and overall industry consolidation. Rig counts, drilling permits, and crude oil prices have all seen declines, impacting the upstream job market. The price of West Texas Intermediate crude dropped to $62.17 in May, its lowest since mid-2023, and continues to hover around $63.

Why It's Important?

The job losses in the Texas oil and gas sector highlight potential challenges for the industry if crude oil prices continue to decline. The layoffs, although minor compared to those during the COVID-19 pandemic, indicate stagnation and the possibility of further reductions in employment. The industry has seen relative job growth since 2023, but the recent losses suggest a potential down cycle. Workers are facing difficulties finding employment opportunities, and some are considering new areas of specialization to mitigate the impacts of a volatile job cycle. Consolidation within the industry has led to layoffs across various sectors, with companies like Chevron and Encino Energy announcing significant job cuts.

What's Next?

Upstream workers are advised to monitor crude oil prices and the balance between global demand and supply over the coming months. If prices average lower in 2025 compared to 2024, and rig counts remain weak, further layoffs may be expected. The industry will need to navigate these challenges to prevent additional job losses and ensure stability.