Energy & Environment

6 Months Into The Oil Market Crash, Still No End In Sight

The oil and gas industry is used to boom and bust cycles, but workers and economists agree that this downturn is different. That’s because there’s still so much uncertainty around the coronavirus pandemic.

An oil and gas refinery near La Porte, on Aug. 28, 2020.

On March 1, oil and gas leaders from around the globe opened up their email to learn the premier conference for the industry CERAweek, held every year in Houston was canceled due to fears over the coronavirus.

This was on top of an already rough start to the year: Saudi Arabia and Russia were locked in a price dispute that threatened a global oversupply of cheap oil.

Then in mid-March, the pandemic brought oil demand to a near standstill as people stopped driving and flying. In response, oil and gas companies slashed budgets, furloughed and laid off workers, and started to sell off assets.

At six months old, the oil bust of 2020 is still threatening bankruptcies and layoffs. Thousands of oil and gas jobs in Houston have vanished. Oil demand remains low as prices hover at or below $40 a barrel. This has created even more uncertainty for an industry familiar with boom and bust cycles.

At the start of the pandemic, Sid Banerjee was pretty sure he'd keep his job, but the Houston petroleum engineer still had doubts. He'd seen a couple of downturns in the industry before, but this is the first one since the birth of his twins last December.

“It's hard not to think about the cost of babies and health insurance and things like that," Banerjee said in early April, "and not to worry, at least a little bit — not just about whether or not I can keep them safe from pandemics and the world around them, but whether or not I can stay employed and provide some degree of financial assurance that let's us protect ourselves.”

Click to expand and see a timeline of the oil market crash.

Then on April 20 oil prices plunged into negative territory for the first time ever. Over the next few months, companies posted billions of dollars in losses. A handful filed for bankruptcy. By the end of July, some 18,000 oil and gas workers in Houston had lost their jobs.

That includes Level III NDT Welding Inspector Jeff Lattea. Even though he lost his job at the start of the pandemic, he had a temporary one lined up for April and May.

But six months into the coronavirus-fueled oil crash, Lattea is collecting unemployment for the first time in his life.

"I've never been on any kind of government assistance or anything like that," Lattea said. "What really kept my head above water was the added $600 a week benefits, and then those evaporated."

Lattea said he hopes to use his certifications and experience to land some independent work, get off unemployment, and if possible, return to a permanent job in oil and gas next year.

As companies cope with smaller workforces and low per-barrel oil prices, energy economist Ed Hirs said they still face coronavirus-related challenges that are keeping demand low.

"This is a public health disaster and we have state, local and federal government mandating shutdowns, mandating a stop to economic activity," Hirs said. "That’s why this (downturn) is really different."

Both Jeff Lattea and Sid Banerjee said they've seen a lot of people leave the industry in the last six months, possibly for good. But not Banerjee — he's still got his job as a petroleum engineer, working from home with his now nearly 9-month-old twins.

However, people have been let go from his work. Banerjee is in a leadership position and has been a part of some of those employment decisions.

"Taking someone that up until now you’ve been trying to help develop in their own career, and kind of like protect and trying to keep them in your team," Banerjee said, "and go from that sort of relationship to one where you are now saying, ‘hey, I know things are rough out there, and unfortunately, we’re going to take away this one other bit of sort of consistency and safety in your life.' Yeah, it was difficult."

Banerjee said adding to that difficulty is the uncertainty around COVID-19.

"I feel like that is the one thing about this particular downturn," he said, "is that you don’t really have a sense of when things are going to get better."

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Kyra Buckley

Kyra Buckley

Energy Reporter

Kyra Buckley is an Energy Reporter with Houston Public Media. Before joining the News 88.7 team she was the Morning Edition Host and a reporter at KUNC in Northern Colorado. She started in public radio in her hometown of Eugene, Oregon where she hosted Weekend Edition and reported for KLCC....

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