The price of oil has fallen to its lowest level in 11 years and jobs in the oil sector are threatened. The price of benchmark Brent crude hit a low of $36.05 a barrel on December 28, the lowest since 2004 while US light crude dipped below $34 a barrel to its lowest level in six years. With analysts predicting that 2016 would see further declines, there is worry spreading across the oil sector jobs.
It is estimated that the collapse in oil prices has so far claimed more than 200,000 jobs worldwide. Oilfield service giants Schlumberger and Halliburton have axed more than 20,000 and 18,000 oilfield service workers, followed by Weatherford International and Baker Hughes with 14,000 and 13,000 layoffs. Among the big integrated oil companies, Royal Dutch Shell has laid off about 7,000. Many smaller independent oil and gas producers have slashed dividends and sold assets as they report net losses. Equipment giants Caterpillar and Siemens as also makers of steel drilling pipes have also been hit together with manufacturers of rail cars used to transport crude oil.
However, a handful of producers have cut personnel costs without pink slips by spreading the pain among their employees. Companies such as Occidental Petroleum Corp. and Canadian Natural Resources Ltd. have employed hiring freezes, caps on bonuses and even across-the-board wage cuts to preserve jobs. Many firms are trying other creative approaches to reduce labour costs such as offering unpaid sabbaticals.
With crude showing no signs of rebound, 2016 is expected to see more job cuts in oil and gas companies and the service firms that support them.