It turns out we were wrong. It was only mostly dead. But now?
Doornail dead. Thanks, JBE!
Louisiana is among five states hit hardest by oilfield job cuts—shedding 10,200 jobs thus far in 2020, according to a recent federal labor report.
While the U.S. economy added 1.8 million jobs in July, according to the Bureau of Labor Statistics, the Oilfield Services and Equipment Employment Report found that employment in the oilfield services and equipment sector fell by more than 9,300 jobs in July.
The monthly report, compiled and published by the Petroleum Equipment and Services Association, or PESA, shows total job losses due to pandemic-related demand destruction have reached 99,253. OFS employment is down more than 118,000 jobs since July 2019 and is at its lowest point since March 2017.
Using BLS data, PESA, in consultation with researchers from the Hobby School of Public Affairs at the University of Houston, estimates OFS sector jobs in the U.S. dropped from 764,189 in February to 664,936 in July, a decline of 13%. Losses were heaviest in April, totalling 59,306 jobs—the largest one-month total since at least 2013.
We already know there are more than 420,000 Louisianans filing unemployment claims, which is an alarmingly high number that is sure to wipe out the state’s unemployment insurance fund and thus bring dire consequences which could well permanently damage the state’s economy.
Things are so bad in the oil and gas sector that the state’s congressional delegation is trying to get the federal government to pay for plugging oil wells which are abandoned due to the low price of oil and the pullout of drilling companies from the state, so that at least the oilfield service companies might have some revenue to do something. When the industry is trying to get money to shut wells down, you know things are bad.
You would think under such circumstances Edwards would be talking about closing down coastal lawsuits, making some legal changes so that legacy lawsuits are no more lucrative in Louisiana than they are in Texas, Oklahoma or New Mexico or even Mississippi, accepting changes to Louisiana’s severance tax regime that would make it competitive with the state’s neighbors and so on.
And you would be wrong.
The thing is, the number of unemployment claims don’t really reflect the damage to oil and gas in Louisiana current economic conditions are doing. We don’t have the number that really reflects it, and we won’t for a while. Because the real effect is going to be found in outmigration numbers. The people losing their jobs in Louisiana, whether in oil and gas or in other industries which currently look like dead ducks, aren’t necessarily sticking around to draw unemployment. They’re just leaving.
If you work in oil and gas and your job goes away in Louisiana, wouldn’t you just move to Texas to find work doing something else for now? Knowing that when oil and gas jobs do come back, they’re far more likely to come back in Texas than in Louisiana, which was losing oil and gas jobs while Texas was gaining them not long ago?
Interestingly, one measure of migration can be found in UHaul rates.
If you want to rent a 10-foot UHaul truck in New Orleans and drive it to Austin on September 1, which you would do if you’re moving from New Orleans to Austin, it’ll cost you $683. To move from Austin to New Orleans on the same date, it’s $369. Does that give you an indication which way things are trending?
This is what a dead economy looks like. The longer it’s dead, the less chance of a recovery, you know.