Alaskan oilfield employees are shaking in their boots, and not just because of the recent earthquake. In February of 2009 oil prices began to drop at a historical rate. Almost every year since, Alaska has either seen, heard or read about companies like Exxon, BP and ConocoPhillips having major industry layoffs. In a state almost entirely reliant on the price of oil, many Alaskans have had to deal with the heartbreak of losing their jobs or coping with someone they know losing their job because of the current oil market.
Many people may wonder what causes the cost of oil to continue to plunder after the previous success of the industry and dependence grown accustomed to it. Although this is a complicated question to answer, it boils down to the freshman-level economic definition of supply and demand. During recent booms, the United States has nearly doubled its oil production forcing other oil markets to find a new home. Oil marketing countries such as Saudi Arabia and Algeria are being pushed into competition for Asian oil markets resulting in companies needing to lower their prices.
In response many exploratory projects in Canada and the Gulf Coast have been put on hold by the Organization of Petroleum Exporting Countries (OPEC), responsible for maintaining fair and stable prices for petroleum producing countries including many projects in Alaska that were sure-fire boomers.
Eli Gallt, a General Foreman of Structural Fabrication for ASRC Energy Services, said he personally has been forced to layoff over 50 employees within the last six months; something he continually struggles with as a regular part of his construction career that began in 2008. A year when oil had its absolute peak before the recent downfall when prices sat at $136.31 a barrel. A number that stands high above today’s market value of $30.77.
Gallt has been with ASRC for eight years, a relatively long period of time for the trade. Gallt said that generally employment in his industry can range anywhere from two weeks to two years depending directly on the price of oil.
“If the returns aren’t there the companies won’t spend the money,” Gallt said.
As many Alaskans currently in the industry already struggle within the job market, one must consider the spike in 2011 of new engineering students. In 2011, college universities nationwide saw a 30 percent increase in petroleum engineering degree applicants according to the ASEE (American Society for Engineering Education) website. Most of these students are now graduated and flooding the market for petroleum engineering jobs.
As the oil industry constantly has its booms and busts, many consider this to be just temporary, but with historic lows since the 1990’s companies have been forced to decommission more than two thirds of their oil rigs. Doing so while also deeply cutting back their budgets on exploration, production, and construction. It is estimated that over 250,000 oilfield employees have lost their jobs. Although there are signs that show oil prices may rise with the demand of oil in 2016, it doesn’t look like it will fully recover anytime soon.
Dean of the College of Engineering at UAA Fred Barlow believes that the market and economy is cyclical and in four years the market will likely look completely different.
“We are working hard to equip our students with the knowledge and professional skills that make the marketability of an engineering degree above average under any set of economic conditions.” Barlow said.
Although the current job market is struggling UAA has roughly 1,300 students enrolled in its engineering programs according to Barlow. Most of those students are either enrolled in mechanical engineering, computer and science engineering, or civil engineering. All of which can be directly related to the oilfield industry.
“I am working closely with UAF’s College of Engineering Dean [Douglas] Goering to explore ways in which we can work together to strengthen both programs.” Barlow said.
UAF, unlike UAA, offers a petroleum engineering program. Engineering students at UAF in the petroleum engineering program more directly face the issues of declining oil prices than most other engineering students.
“Students or graduates should reach out to contractors or employers. Find out the answers and the requirements that they like to see in order to be employed by these companies,” said Sean Schubert, a member of the workforce development team at King Career Center.
Although the oilfield industry has become grim in recent years, many like Schubert and Barlow have a positive outlook of optimism in that the jobs are available and will become more available. The oil industry of Alaska has a taken a large hit scaring students, employees and companies. The scarring of families affected by recent layoffs is more than fear; it’s a problem many are forced to face to deal with in the boom and busts of oilfield careers.
Alaska’s oilfield has become a metaphorical roll of the dice based almost entirely on the price of oil. Families will experience feast and famine while employed in the oilfield. The price of oil directly and indirectly relates to the food on most Alaskan’s tables. Alaska’s economy and state budget almost solely rely on the price of oil.