API DETAILS LOSS OF JOBS IN U.S. PETROLEUM INDUSTRY

June 19, 1995
Oil industry jobs plunged 23% in the U.S. during 1981-93, the American Petroleum Institute reports.(24271 bytes) API said industry jobs slid from 1.9 million to less than 1.5 million during the period, while other industries were adding workers. All segments of the oil industry except gasoline marketing lost jobs. Exploration and development experienced the worst losses. API said, "Unfortunately, the jobs lost paid much better wages than the jobs gained. Thus, payroll losses in the petroleum

Oil industry jobs plunged 23% in the U.S. during 1981-93, the American Petroleum Institute reports.(24271 bytes)

API said industry jobs slid from 1.9 million to less than 1.5 million during the period, while other industries were adding workers.

All segments of the oil industry except gasoline marketing lost jobs. Exploration and development experienced the worst losses.

API said, "Unfortunately, the jobs lost paid much better wages than the jobs gained. Thus, payroll losses in the petroleum industry exceeded job losses in percentage terms: a 29% drop in payrolls vs. a 23% decline in jobs.

"Of the total loss in petroleum industry payrolls, 23% was attributable to a structural shift from relatively high pay to relatively low pay jobs. The remaining 77% represented pure job loss."

FIELD SERVICES

Exploration/development (oil and gas field services) employment dropped from 430,000 to 171,000, or 60%, during the period, which was much more than the 47% drop in mining, the sector of the economy in which it is classified.

Wages in oil and gas field services increased relative to the sale price of petroleum products, putting pressure on employers to increase productivity through technology and reduce employment.

"In fact," API said, "during 1981-93 employment and total hours worked in U.S. oil and gas field services fell sharply as many oil field workers took up other occupations or worked in foreign areas being explored by American firms.

"These firms, in response to low and decreasing rates of return from domestic petroleum exploration/development, allocated rising shares of exploration expenditures to foreign oil fields, where many American workers are now employed."

Technology advanced considerably in the mid-1980s, permitting increased productivity.

"Technological advances also led to substitution of scientifically trained and technically skilled employees for unskilled ones because the advances meant more search for and delineation of petroleum formations and less drilling.

"Statistical analysis indicates that increases in wages were a more important determinant of falling employment than were decreases in petroleum prices."

GOVERNMENT POLICIES

API said because U.S. policy restricts exploration on public land at the same time opportunities are expanding overseas and because better technology has emerged, any rise in petroleum prices has a diminished effect on employment of oil field workers in the U.S.

"In effect, the benefits of advanced technology are diluted by its application only to mature areas in the U.S. Consequently, wage levels become more of a limiting factor for employers than otherwise would be the case."

API also said efforts to stimulate exploration through tax credits or similar actions would have limited effect on industry jobs.

"Reduced restrictions on drilling on public land would appear to have potentially greater employment impacts, in part because exploration on public land offers greater potential for realizing the full benefits of advancing technology."

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