Job estimates reflected in October 2020 Texas Petro Index, which declined for the 20th straight month to 139.9
AUSTIN, Texas – Dec. 9, 2020 – Oil and gas industry job losses in Texas are worse than previously reported, based on updated employment estimates from the Federal Reserve Bank of Dallas and the Texas Alliance of Energy Producers.
The headline industry employment data, which is only updated and revised once a year, indicates the loss of nearly 70,000 jobs from December 2018 through August 2020. However, new data from the Dallas Fed and the Alliance suggests the employment loss is much deeper, with more than 80,000 jobs lost during the same period. In addition, nearly 60,000 jobs were lost from February to August of this year, rather than the 50,000 previously reported.*
“The revised employment estimates clearly suggest that COVID-19 has cut into the upstream oil and gas sector to a deeper extent than previously thought – and those numbers were bad enough to begin with,” said Karr Ingham, Petroleum Economist for the Texas Alliance of Energy Producers and the creator of the Alliance Texas Petro Index (TPI). “More than 35 percent of all upstream jobs were lost in a 20-month period from December 2018 to August 2020. Most of that occurred in 2020, with the industry shedding nearly 30 percent of upstream oil and gas jobs just between February and August of this year.”
The downward revisions came almost exclusively in the oil and gas “support activities” jobs, which include service and drilling company jobs. Oil and gas extraction (operating and producing) jobs were largely unaffected by the recent revisions.
On the bright side, August still appears to be the trough in the current job loss, with about 1,500 jobs added back through October: “It will be a long climb back, and indeed time will tell whether or not the industry will ever return to the pre-downturn levels reached in late 2018,” said Ingham, noting that the October total upstream employment estimate in Texas is down by nearly 78,600 jobs compared to the December 2018 cyclical peak of 228,500. Upstream oil and gas employment consists of “oil and gas extraction” (operating and producing) jobs, oilfield service company jobs, and drilling jobs.
October 2020 Texas Petro Index
The monthly estimates are also used in the calculation of the Texas Petro Index, a monthly tracking device for the Texas upstream oil and gas exploration and production economy. The TPI was also revised downward based on the downward revision in employment data. The Texas Petro Index declined for the 20th straight month in October falling to 139.9 for the month down from a revised 144.0 in September, and down by nearly 29% compared to the October 2019 TPI of 196.8.
Through October, the index has lost nearly 35% of its value since its recent peak of 213.8 achieved in February 2019. The TPI has declined by some 26% just since February of this year.
The TPI table of monthly upstream indicators continues to reflect deep year-over-year declines in most components of the index. However, most have improved compared to the pandemic low points earlier in the year, including crude oil prices, the rig count, and now industry employment.
“A turnaround is coming in the Texas Petro Index as various measures of oilfield activity continue to improve,” said Ingham. “Crude oil prices have continued to register improvement sufficient to grow the statewide rig count from record low levels, and other upstream indicators will follow suit.”
Findings from the October 2020 Texas Petro Index Analysis:
- Crude oil posted prices averaged $35.42 in October, down by 30% compared to the October 2019 monthly average. Posted crude oil prices in April, the worst of the pandemic pricing, averaged $14.68 per barrel. The recent cyclical peak in crude oil pricing was achieved two years ago with posted prices averaging over $67/bbl in October 2018.
- The statewide Baker-Hughes rig count averaged 122 in October up from 108 in September but down by 71% compared to the October 2019 average of 419, and down by 77% compared to the 533 rigs on average in October 2018.
- 5,427 original drilling permits were issued by the Texas Railroad Commission in the first ten months of the year, a decline of more than 45% compared to the total through October 2019.
- Estimated daily crude oil production in Texas was just under 4.6 million barrels per day in October, down from 4.63 million bpd in September and the peak of 5.4 million bpd in March of this year. Daily production fell by more than a million barrels per day between March and May.
- An estimated 149,800 employees were on the payrolls of upstream oil and gas companies in Texas (operating/producing companies, service companies, and drilling companies), a decline of more than 30% compared to the October 2019 industry employment estimate. “Support activities” jobs (service and drilling companies) are down by nearly 43% compared to year-ago levels.
For more information about the Texas Petro Index, click here.
*The Texas Petro Index utilizes industry employment estimates from the Federal Reserve Bank of Dallas, which are seasonally adjusted, and “early benchmarked” to enhance the ongoing accuracy of the data. The estimates are further adjusted by the Texas Alliance of Energy Producers to filter out mining jobs in Texas that are not related to oil and gas. The “headline” upstream oil and gas estimates are revised just once a year, which means that the data often become inaccurate during times of rapid employment gain or loss. They are also not seasonally adjusted, making month to month comparisons difficult and sometimes inaccurate as well.
About Texas Alliance of Energy Producers
The Texas Alliance of Energy Producers is the most knowledgeable and effective statewide oil and gas association in the nation. Serving more than 3,000 members, the Alliance provides a voice for sound U.S. energy policy. These individuals and organizations – from small independents to publicly traded companies – are the driving force behind the U.S. energy renaissance. Founded in 1930, the Alliance celebrates its 90th anniversary this year. For more information, visit https://www.texasalliance.org/ and @TexasAllianceEP.