Exxon Mobil announced on Tuesday that it would lay off 2,000 workers globally, the most recent mass layoff in the oil industry as businesses adjust to lower oil prices and more productive drilling techniques. The layoffs, which amount to roughly 3% of Exxon’s worldwide workforce, are part of a longer-term initiative to reduce expenses and combine offices. According to filings, Exxon’s workforce has already decreased by 19% since 2014.
According to Exxon, combining workspaces “drives innovation.” An Exxon spokeswoman added: “Our global office network was established decades ago under very different circumstances. To support the collaboration so critical to our success, we are aligning our global footprint with our operating model and bringing our teams together.”
Big oil planning on cutting jobs
Exxon’s majority-owned company, Imperial Oil, will bear nearly half of the cuts in Canada. By 2027, Imperial intends to cut 20% of its workforce. A person with knowledge of the situation claims that none of Exxon’s most recent layoffs are in the United States.
Earlier this year, BP, ConocoPhillips, and Chevron all announced layoffs that would result in the loss of thousands of jobs. ConocoPhillips has cut its workforce by 38% to about 11,800 employees since 2014, while Chevron has reduced its workforce by 26% to about 45,000. In contrast, BP’s average workforce has increased by 7% to 91,000.
According to Labor Department data, employment in the U.S. oil and gas extraction industry has decreased by almost 80,000 since 2015. Meanwhile, the Energy Department reports that crude output increased by 45% to a record 13.6 million barrels per day. “These companies are clearly the best in terms of the application of technology, the best in terms of intellectual property, intellectual capital,” said Ed Hirs, an energy fellow at the University of Houston.
Employment and oil prices
When crude reached $100 a barrel in 2014, the number of people working in the U.S. oil industry reached a peak of just over 200,000. When OPEC decided to stop controlling prices that year, it set off a price collapse in 2015–16 that left many American drillers bankrupt.
Exxon rarely pursues mass layoffs. Due to a collapse in demand during the pandemic, it laid off up to 15% of its global workforce in 2020, including 1,900 positions in the United States. Exxon reported a $20 billion loss that year. By merging offices and laying off employees, it has reduced structural costs by $13.5 billion since 2019.
The industry is now more financially stable. Wall Street has pressured drillers to settle debt and return money to investors. Nevertheless, reductions may affect the supply chain. “When Conoco stops spending money and lays off people, there’s a lot of other companies that are impacted by that down the food chain,” said Roe Patterson, co-founder of Marauder Capital and former CEO of Basic Energy Services.
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