Oil prices are through the roof. Here’s why job numbers in the Alaska oil patch are not.
Oil prices are through the roof. Here’s why job numbers in the Alaska oil patch are not.
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Wed, 06/29/2022 – 2:04pm
Roughnecks work on BP’s Parker Rig 272, which is drilling into the Lisburne Reservoir at drill site L3 in Prudhoe Bay on Friday, May 22, 2015. (Loren Holmes / ADN)
Oil prices in Alaska have surged to their highest levels in a decade.
But job numbers in the oil and gas industry have barely budged upward after they crashed during the COVID-19 pandemic, even as other sectors of the economy enjoy a solid rebound.
Industry observers in Alaska give several reasons for the tepid job growth in the oil patch.
They say it mirrors a trend in the industry nationally, a slow recovery that breaks from past practice. Companies, increasingly flush with cash, aren’t investing in oil field activity like they once did when the good times rolled.
They say companies are now more likely to question big, long-term projects, as investors raise concerns about the industry’s past performance and new regulations that could result from climate change policies.
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Sara Teel, an economist with the Alaska Department of Labor and Workforce Development, said in a June report that companies face shareholder pressure to cut capital expenditures, while some lenders and investors are shying away from funding projects in environmentally sensitive areas such as the Arctic.
It’s usually “drill, baby, drill” for oil and gas companies when prices rise, Teel said in a phone interview.
“But when prices spiked this time, they restricted spending,” she said. “They are investing some, but not like before.”
In Alaska, the COVID-19 pandemic gutted the oil and gas workforce. Jobs plunged by about 40% as demand for crude oil, and the gasoline it makes, collapsed.
Alaska North Slope crude oil hit a record low of $16.55 a barrel in April 2020, Teel noted in the report. Two years later, the price rose to $109.41 per barrel, a “whopping” 561% jump, she wrote.
Meanwhile, jobs in Alaska’s oil patch have grown by only 18%, to 7,200, after bottoming out in November 2020 at 6,100 jobs, the latest state records show.
The workforce is a fraction of what it was in Dec
