Bauer Business Focus

Layoffs Show Houston’s Energy Industry ‘Still Adapting’ To Life After Oil Downturn

Oil and gas companies are cutting costs amid subdued oil prices, creating uncertainty for their workforce.

Vikas Mittal, marketing professor at Rice University, says energy companies are cutting costs and often payroll is their first choice.


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This week, Occidental Petroleum confirmed it's laying off workers in Houston and other places as a result of its merger with Anadarko last year.

And Houston-based Enterprise Offshore Drilling says it's laying off more than 60 oil rig workers.

"I think while people were hopeful of a recovery, with the bust, I don't think the recovery has actually materialized," Vikas Mittal, a professor at Rice University's Jones School of Business school, said. "I think we're still in a space where there is a lot of uncertainty in terms of oil prices."

He said the industry is still adapting to the new reality after the 2014-2016 oil bust.

"There is a shift to cut cost, automate things," Mittal said. "And part of all of that – and you see this also in retail – is to take out payroll."

The Greater Houston Partnership forecasts the energy industry will lose 4,000 jobs this year, more than any other sector in Houston.

It predicts exploration activity will continue to contract, oil prices will decrease further and more companies will merge or file for bankruptcy.

Mittal doesn't expect this to damage the overall Houston economy much, thanks to increased industry diversification. But for the energy industry, he said, it means a reputational damage among prospective employees.

"I see this among some of my students who were sponsored by energy companies to get an MBA," Mittal said. "Many of them have actually started to look elsewhere and found very good jobs in other tech industries, in the digital economy, in social media companies, and many have migrated to California or Seattle."

Click on the audio above to listen to the interview with Vikas Mittal.

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