The Houston oil and gas industry has taken its fair share of punches—many still remember the oil bust of the 1980s, and the one in the 1990s, and that one in the 2000s and that one back in the 2010s—but that doesn’t mean another hit doesn’t still hurt.
According to several news sources, Irving-based oil giant ExxonMobil announced Thursday that the company will be laying off around 1,900 employees, mostly from the Houston management offices. ExxonMobil, the largest oil and gas company in the U.S., employs almost 16,000 people in the Houston area alone, according to the Houston Chronicle.
Hints that layoffs could be coming leaked last week. Chairman and CEO Darren Woods told the company that there would be cuts in an employee forum on October 21.
“Making the organization more efficient and more nimble will reduce the number of required positions and, unfortunately, reduce the number of people we need,” he said in a statement summarizing the forum. “We all recognize the consequences of these difficult decisions and the impacts they have …”
The oil and gas industry has taken a pounding from the coronavirus pandemic. It was already on shaky ground last spring due to OPEC clashes and oversupply during the shutdown when the price per barrel of oil plunged below zero for the first time ever on April 20. One day later, prices plunged to just $11.69 for June deliveries of West Texas Intermediate crude oil and the overall price of Brent, the international benchmark for crude oil, dropped 21 percent.
According to Woods’ statement, oil demand dropped from 101 million barrels per day in December 2019 to 78 million barrels per day by April 2020, and the global 60-percent drop in automobile production last April also had a severe impact on ExxonMobil.
“It’s difficult to overstate the devastating impact of the pandemic on businesses big and small, in every community and country around the world,” Woods said. “The impact has been especially severe on our industry as energy consumption contracted when economies shut down.”
While the 1980s oil bust didn’t arise from a global pandemic, the likes of which the world hasn’t seen in a century, it also came in a similar economic climate. Houston lost 211,000 jobs due to the 1982 recession. In March and April of this year alone, 350,000 Houstonians were laid off.
It took about seven years after the 1982 collapse for Houstonians to start to find solid footing, and it wasn’t until 1990 that the city gained back 200,000 of the jobs lost. While we don’t know how long the impacts of the coronavirus will last, we know that we’re probably in it for a long haul. So for now, fasten your seatbelts. It always comes back eventually, but getting through the tough times is never a pleasant experience.
“We also know the current situation is temporary,” Wood said, “but with an uncertain path and pace of recovery.”