Velda Addison, Hart Energy

The number of oil and gas jobs lost continues to mount despite recent gains in commodity prices.

This coupled with other economic factors signals more difficult times ahead for the oil and gas industry, according to Karr Ingham, a petroleum economist and author of the Texas Petro Index (TPI).

“First, it may or may not be the real deal; prices increased in part on the hope that some agreement might be reached between producing countries elsewhere in the world on production limitations and that’s a prickly proposition,” Ingham said in a news release from the Texas Alliance of Energy Producers. “And second, price increase now produces a change in other oilfield indicators later, and indeed most other components of the index continued to decline in March.”

A production freeze agreement, as many know by now, didn’t happen April 17 as some might have predicted beforehand, given Iran’s eagerness to raise its production to pre-sanction levels and Saudi Arabia’s unwillingness to move forward with the freeze without Iran. West Texas Intermediate (WTI) crude fell by about 3% by midday April 18.

Related: OPEC Unglued: Saudi Arabia Won’t Freeze Oil Growth Unless Iran Has To

WTI was about $44.05/bbl, up slightly, on the New York Mercantile Exchange on April 20.

The WTI spot price was below $27/bbl in February.

But the gains have not stopped companies from hemorrhaging jobs, considering the WTI spot price was more than $102/bbl in February 2014.

Reuters reported on April 20 that Shell has started a voluntary severance process in the Netherlands as the company aims to cut about 10,300 jobs worldwide to cope with lower profits.

Chevron is making plans to cut more than 650 jobs in Houston, according to Fuel Fix. The news, confirmed earlier this month, came after the company said it would cut its workforce by 4,000 in 2016.

Add to this falling rig counts, well completions and drilling permits.

In Texas alone, Ingham said the TPI indicates “more than 84,000 direct industry jobs have been lost through March from peak upstream employment in December. Upstream industry employment in Texas will almost certainly continue to decline for most of the rest of the year; history suggests that employment will trough and begin to increase a good six months after prices reverse course.”

The TPI is a composite index based on several upstream economic indicators, which include production volumes, prices, rig counts, completions, drilling permits and employment. The TPI, which gauges the health of the industry in Texas, experienced a year-on-year 40% drop, falling to 170.7 in March.

According to the news release,

  • Oil production in Texas dropped to an estimated 108.4 million barrels in March, down about 4% from the same time a year ago, while natural gas production fell to 721.5 billion cubic feet, down about 3%;
  • The statewide rig count dropped to an average 221 in March, compared to 492 in March 2015 and
  • The Texas Railroad Commission issued 1,594 drilling permits in first-quarter 2016, down from 2,949 for the same period last year.

In the statement, Ingram warned against “reading too much into the oil price hike.”

But it never hurts to have some hope, which still is a good thing.

Velda Addison can be reached at