Over the years, the oil industry has been undergoing boom and bust cycles which have been affecting its operations. These are uncertainties that the sector is overcoming its challenges which started few decades back. In 2014, oil prices remained stagnant at $100 per barrel. The price later dropped to $50 few months later and remained there. In 2016, oil prices fell below $30. According to United States Energy Information Administration, this incident occurred for the very first time since 2003.
Despite recovery from recession in the last ten years, oil prices have been declining. According to energy experts, technology, low demand coupled with a more careful approach by executives in the petroleum and banking sector could contribute the industry’s leaner look.
Jobs that were at a time undertaken by traditional oilfield workers have now become automated by oil firms which now concentrate on projects that have a high rate of success in the face of present challenges.
The cycle which was considered as not ordinary has generated a lot of debates and comments. A lead client service partner in Deloitte’s energy industry practice, Jim Kiser said, “The pace of the price and the depth account for the difference in this cycle. Not many people believe it will drop so low nor stay that low.”
Another area that is affected by the bust cycle is employment in the oilfield. There was generally a global occurrence of job loss. In March 2016, an overall loss was experienced in Texas, an occurrence that was seen for the first time in eleven months as a result of sudden fall in oil prices.
According to Graves consulting firm, no less than 440,000 people lost their jobs across the globe. Fortunately, this situation is now gradually improving. Towards the end of 2016, there was a record of job gains. For instance, Texas in its January monthly job report recorded the creation of approximately 1,900 jobs in the energy sector.
Experts in energy sector believe that the severe downturn will lead to restructuring in the oil sector, among which is keeping job growth in check.
Besides disengagement of workers, supply problem may arise. According to Kisser, as the business picks up again, the main priority of her company’s clients is to attract new employees. Many people who quit the industry in the face challenges being experienced within a short period are unwilling to return. New drilling techniques indicate the industry is being provided with bounty of oil. Using advanced technology, drilling in the Permian basin that used to take between 30 and 45 days now gets completed in 15 days.
Drilling efficiency has repositioned the industry for greater exploits as the best crews and rigs were utilized in best locations. Experts are of the opinion that this efficiency will pave way for a new boom.