Lower oil prices aren’t helping some American workers
It’s hard to pity the oil industry.
But the scope of the losses experienced by the US mining industry—which includes oil and gas drilling—is pretty impressive.
Mining companies with more than $50 million in assets lost roughly $26.7 billion during the second quarter. (That’s March through June.)
While not as steep a loss as the $37.4 billion that these companies lost during the second quarter of 2015, it’s just the latest in a series of giant gouts of red ink brought on by the sharp collapse of oil prices that started back in 2014.
Traditionally, a sharp decline in oil prices would clearly be a good thing for the US economy. That’s because gasoline prices would fall, freeing up more money for people to spend elsewhere in America’s all-important consumer economy.
But in the last decade or so, the US has reshaped its position in the global oil markets. Now the US is not only world’s largest consumer of petroleum, it’s also the world’s largest producer. And that means that a sharp oil price decline hurts oil-producing areas of the country, in addition to giving consumers a break on gas prices at the pump.
And that’s what we see all over. For instance, oil field service company Baker Hughes—which sells services ranging from consulting on the types of drill bits used on a rig to complex computer analysis of the size of oil underground oil pockets—just recently announced it was cutting pay in an effort to avoid layoffs. (According to the Houston Chronicle, Baker Hughes employed 62,000 people in 2014, before the oil bust began. That’s down to about 36,000 globally today.)
This is a bummer. While, you might have issues with the environmental costs of oil and gas drilling, the oil business has also been one of the few bright spots in recent years, when it comes to creating good-paying jobs for Americans without college educations.
So while you might not pity oil companies, you might at least give a thought to the workers.