Texas' oil, gas job recovery slow compared with solar, wind sectors

The Texas oil and natural gas patch has moved slowly to bring back jobs lost during its most recent downturn, and lower-carbon energy industries may soon deserve recognition as the future of the state's workforce, according to an analysis by the Institute for Energy Economics and Financial Analysis.

Oil and gas producers in Texas often point to steady job creation as a chief benefit of their industry, but the most recent boom-and-bust cycle may underscore the sector's diminishing power to create jobs. Producers have thus far brought back only around half of the 76,3000 jobs shed between September 2019 and September 2020, the IEFFA found in a review of data from federal and state agencies published July 18.

Tightness in labor markets may help partly explain the slow rebound as oil and gas companies have bemoaned difficulties in sourcing labor over the last year-plus, even as domestic oil and gas production has rebounded strongly. But employment in other energy industries in Texas — including in wind and solar energy — has roared back over the same period, perhaps highlighting the oil and gas sector's waning status as a chief jobs creator in the state.

Industries involved in the production of fuels in Texas lost over 14,000 jobs last year, while an additional 13,000 new jobs were created in sustainable technologies like low or zero-carbon vehicles, energy efficiency and solar over the same period, according to data from the US Department of Energy's US Energy and Employment Jobs Report published June 28. This dichotomy suggests Texas policymakers — historically strong supporters of petroleum industries — should start focusing on other areas if they intend to spur economic growth, IEEFA analyst Tray Cowan told S&P Global Commodity Insights July 18.

"If you are focused on oil and gas to be your savior for creating jobs you are focusing on a cyclical market," Cowan said. "It makes more sense to invest your policy dollars where you can grow faster."

While Texas is home to more than a tenth of all jobs in the US energy sector overall, employment growth in oil and gas production has in recent decades lagged far behind other industries in the US energy hub. Overall nonfarm employment payroll in Texas grew 87% between 1990 and the present but just 22% in oil and gas industries over the same period, the IEEFA found.

The pandemic downturn was not the only shockwave that prompted a long-lasting jobs reduction. The 2014 oil price plunge also produced a trend in which a portion of lost jobs were never recovered, due partly to companies pushing dollars into innovations that boosted returns and cut manpower, Cowan told S&P Global. Tighter rig deployment, investments in automation, and the industry's overall shift from an exploration to a development phase following the US shale boom has made some jobs simply redundant in the Permian Basin and elsewhere.

"[Oil and gas producers] are very innovative so with each cycle there are less jobs," Cowan told S&P Global. "In Texas you can focus on those jobs but there is eventually going to be an opportunity cost for not focusing [support] somewhere else."