The Oil & Gas Talent Crisis
Full disclosure up front, I’m 4th Generation Oil, and was basically raised an “Oil Brat” in the oil capitals of the world. The Oil & Gas Industry is facing a Talent Crisis. Today’s crisis could be traced back to a milestone in the 80’s when a glut of oil drove prices below $12 a barrel and tens of thousands of workers lost their jobs. This continued approach of managing companies through personnel layoffs, during downturns in the price of oil, have only compounded the problem of attracting talent. Unfortunately, this is not a one and done cycle. For the sake of this article, I am purposely generalizing the price of oil and its impact on the industry. The geopolitical factors that shape the price of oil are complex and can even be subject to influences overnight.
While some “up” cycles have been long, new layoffs only remind younger generations of the instability of this industry. It’s also characteristic of the up-cycles to see large investments made into the company along with increased spending – while the money lasts. This somewhat, “Binge & Purge” mentality has created deeper troughs when the price drops. Couple this with restrictive hiring practices for decades, requiring minimum years of experience to apply for any role, it is evident these factors have sowed the seeds for today’s limited pipeline of talent. If that weren’t bad enough, recent anti-fossil fuel environmental publicity along with events such as the Deepwater Horizon disaster only compound the challenge of hiring younger employees.
Growing up and seeing firsthand the impact to my father’s career of the up and down market, I swore I would never go into oil & gas. Enticed by the lure of the up market in 2013, I could resist no longer. Of course, I learned my lesson in 2015 as part of the largest, most recent layoff thanks to OPEC’s glut of oil in the market. I, of course, have sworn off oil & gas for good after that. Unfortunately for the industry, so too have others. Consider the plight of a Petroleum Engineer who studied to be in the field, only to be laid off in the first round of cutbacks. Those that can establish footing outside of the industry typically do not return. For others, it is a difficult time to get-by between cycles. Only after companies can prove their resilience to commodity volatility will they begin to see an improved pipeline of talent.
With declining numbers of Petroleum Engineering graduates and an aging workforce still in place from the 1980’s, Oil & Gas has a serious Talent Crisis that could have a greater impact than could be fathomed. According to data from Texas Tech, the number of enrolled students pursing petroleum engineering degrees is down 60% from just three years ago. Gasoline and combustion use is only a tiny fraction of the use of petroleum. Consumer products from plastics, to clothing and even toothpaste rely on components tied back to the use of petroleum. It is essential that Oil & Gas companies move quickly to managing their business to a conservative price of oil to ensure stability through the up and down price in the market.
The hardest sale for oil & gas companies now is the premium new generations of workers are placing upon culture in the workplace. Speaking from experience, the mood and/or culture in an organization that is waiting for the other “shoe to drop” is not one to celebrate. The “Brain Drain” from large numbers retiring won’t be the biggest problem they’ll face if there’s no one to hand the baton. It will be inherent for companies to figure out how to smooth out the extremes if they want to attract new generations of engineers and support staff. Until that time, companies stand to be the last choice of a workforce that places such high value in Corporate Culture, stability and development opportunities for their careers. Sadly, those descriptors do not come to mind in today’s oil & gas industry which is why they are losing talent every day. Ultimately they will be faced with the looming question of “what can we do to change this” as they look ahead.