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Oil and gas jobs in Houston fell for the first time in four months despite oil prices well above $100 a barrel.
The region shed 1,600 jobs in exploration and production and oil field services in May after three consecutive months of gains, according to an analysis of Labor Department data by the Texas Independent Producers and Royalty Owners Association, a trade group. The region still has 7,500 more oil and gas jobs than a year ago.
Statewide, the industry cut about 1,400 jobs, not adjusted for seasonal variations.
The reason for May’s decline is unclear, said the trade group’s president Ed Longanecker. It could just be a one month aberration, a statistical anomaly that might be revised later, or a symptom of the labor shortage making it difficult for oil companies to find workers.
Still, Longanecker said, his group expects oil and gas jobs to resume their upward trend. “We project continued employment growth for this sector in the coming months.”
Texas Independent Producers and Royalty Owners Association, known as TIPRO, represents oil and gas producers as well as royalty owners.
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Employment in the oil and gas sector is still recovering after sustaining deep losses during the pandemic, which all but shut down the global economy and cratered energy demand. Economists say it’s unlikely the industry will ever recover all the jobs lost in the pandemic, in large part because of advancing technology and automation that allows companies to produce more oil with fewer workers.
In Houston, for example, overall employment has surpassed its pre-pandemic peak. But the region still has 12,000 fewer oil and gas jobs than it had in February 2020, according to the Labor Department.
Oil prices were rising quickly in last year as the global economy rebounded from the pandemic, energy demand surged, and production failed to keep pace. Then, the Russian invasion of Ukraine sent oil prices soaring as markets prepared for restrictions on oil from Russia, one of the three top global producers along with the United States and Saudi Arabia.
Oil settled Friday at $109.56 a barrel in New York.
U.S. producers have moved cautiously in boosting production, opting to return profits to shareholders rather than reinvesting them in new drilling projects. Oil companies also cite labor and equipment shortages, as well as supply chain disruptions.
While prices are up more that 60 percent from a year ago, oil production has risen 7 percent, or about 800,000 barrels a day to 12 million barrels a day, according to the Energy Department. The Permian Basin of West Texas and New Mexico is on track to produce about half of U.S. output this year, or about 5.6 million barrels per day this year, according to Rystad.
Eventually, high oil prices are expected to help add about 108,000 U.S. oil and gas jobs this year, according to Norwegian-research firm Rystad Energy.
The prediction, Rystad said, assumes that the average price of West Texas Intermediate, the U.S. benchmark, will remain above $100 per barrel through 2022. The Energy Department predicts oil will trade in the high $90s in 2023.
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