Oil and Gas

Oil and Gas

Industry Outlook

Global energy consumption is expected to grow by nearly 50 percent from 2020 through 2050, according to the Energy Industry Association. The energy consumption in the U.S., however, is projected to grow more slowly than the gross domestic product through 2050. This slow growth is attributed to the continued increase in energy efficiency in the United States. In the coming years, the fastest growing sectors in U.S. energy consumption will be electricity and natural gas.

The coronavirus pandemic disrupted growth in the oil and gas industry in 2020. Early in the pandemic, global oil demand plummeted by 25 percent. It has since rebounded sharply, according to a Deloitte report, cutting its losses by only 8 percent. Oil demand is projected to grow strongly in 2021, but will still be lower than it had been before the pandemic, which started in late 2019 in Wuhan, China. U.S. oil and gas companies also scaled back on permanent employees during the pandemic, laying off about 14 percent in 2020. Deloitte's research showed that about 70 percent of the jobs that were lost during the pandemic may not come back by the end of 2021. The rollout of the COVID-19 vaccine in 2021 and economic recovery will lead to increased global spending on oil and gas production. These spending levels will not rise above pre-pandemic levels until at least after 2025, according to a Wall Street Journal article. Investment in renewables and other clean energy technologies is growing, and this threatens to reduce the market for oil and gas in the long term. As described in the article, "energy investment outside of fossil fuels, including renewables and other clean-energy technologies, is set to attract 60 percent of the world's energy investment in this decade."

Much of the demand for oil will probably be met by imports, but oil in shale deposits, recovered by fracturing methods, has boosted the United States’ own reserves and lessened its dependency on foreign oil. According to the Institute for Energy Research, the United States has more shale oil reserves than any other country in the world, with the largest deposits located in Colorado, Utah, New Mexico, and Wyoming. Though extraction poses some technical challenges, U.S. oil shale in-place resources (the total amount of producible and nonproducible oil) contain the energy equivalent of more than 260 billion barrels of oil.

When it comes to oil refineries in the United States, the number of refineries is gradually declining, and their overall production capacity is increasing due to better efficiency. Much of the oil exploration and refining activity has gone overseas, particularly to offshore Africa, South America, the Middle East, Russia, and the North Sea.

The U.S. Bureau of Labor Statistics reported in 2018, that there were more than 109,210 people employed in the natural gas distribution industry. More than 5,200 of these workers were engineers, and 11,330 worked in business operations. Nearly 12,000 employees worked in construction and extraction positions. The median hourly wage of all workers in the industry was $37.41 ($77,813 per year).

The U.S. Department of Labor predicts that employment of petroleum engineers will increase by 3 percent, slower than the average for all occupations, through 2028. The DOL notes that changes in oil prices affect employment levels; for example, when prices are high, oil and gas companies can increase their capital investment in new facilities and expand existing production operations and oil exploration. Petroleum engineers will be needed to develop new methods to extract more resources from existing sources and also to develop new resources. There may also be increased demand for engineers associated with both petroleum and natural gas fracturing. Demand for petroleum engineers in support activities for mining is also expected to be strong through 2028.

Refiners and extracting companies in need of workers, especially petroleum engineers, sometimes recruit college students on campuses before they graduate and receive their degrees. For example, at the Colorado School of Mines in Golden, Colorado, graduates in petroleum engineering don't have to take on debt to go to graduate school. The average starting salary offered to petroleum engineer graduates in 2019 was $87,853, which would make tuition more affordable. Some companies also assist with the tuition cost. Many students are flocking to the field and to colleges like the Colorado School of Mines. As of 2019, the school reported a nearly perfect job placement rate for its graduating seniors.

The demand for other jobs associated with fracturing and increased offshore drilling is also expected to increase in the coming years. Proponents of fracturing project that this extraction method could create more than 1 million jobs in the industry by 2025. According to the American Petroleum Institute (API), the industry currently employs more than 9.8 million people, and the highest concentration of these jobs in the United States is in Texas, California, and Oklahoma.

The biggest caveat to this projection, however, is an increase in environmental concerns over the process of fracturing voiced by the general public and government officials concerned about pollution of groundwater, over-utilization of water resources to provide the 2 to 3 million gallons of water required for one fracturing well, and possible links to earthquakes. While a 2015 study by the EPA found that there was no evidence of widespread damage to drinking-water supplies, a 2016 EPA report found scientifice evidence that hydraulic facturing activities can impact drinking water resources under some circumstances. The EPA did acknowledge that due to "data gaps and uncertainties," they could not fully assess the potential impacts of hydraulic fracturing on drinking water resources.