Oil prices and job cuts

[SnowBells]

Massive job cuts have been announced within the oil industry due to the continuing decrease in the price of oil. I've been wondering what people do who have worked on oil rigs, etc. for years when this happens?

In the US, older people have said they've been through boom and bust years several times before, and they have learned to save during the boom years. But surely, not everyone does? And it is a very specific skill that's not very transferable??

I will confess to skipping the middle of this thread it but I'm here as Dh is a contractor in Oil & Gas.

His offshore days are long gone and he's office based now but his daily rate has been cut and he's on a 3-4 day week.

At least he's not one of those he works(ed?) with who were given their marching orders the day after they came back in January. It's already looking very scary in his area and many of his friends and ex colleagues are fearful for what the short term future will bring.

Afternoon, I thought you seemed to be saying there were fewer jobs around because of the emphasis on the need to compete internationally, in fact throwing all our workers' rights away in the process. That would seem to indicate that there are not enough to go round.

The 70's 'decline', as I understand it, was due to oil shocks. Immediately prior to we, or rather they, had an economic golden age, and generally working people were still a damn sight better off in the 70's than we are now. I also find it interesting that an external shock to the market was considered enough to declare that the market as it was then was not working (strong mix of public /private sector) whereas the strong external shock of 2008, which initially prompted similar calls and I don't believe we have really recovered from, has not had the same results. More is going on there than meets the eye.

I see your education links and raise you this one -'Uk has second best education in europe' (and 6th in the world) from May 2014. An interesting discrepancy. I'll have a look at that later if I get time. www.bbc.com/news/business-27314075 I've never said education is not valuable, quite the opposite.

The 'school leavers unable to operate in the marketplace' type of stories I've come across tend to criticise their work ethos, or lack of it, rather than ability, but like I said... later, I'm a bit curious but...

ps I'm ignoring the France / Italy comparisons as, frankly, I'm not an expert on either so I don't know (or care much tbh, they can sort themselves out), but I've heard that France's, and Greece's, public sector rights really were taking the mickey. Just so's you know. We need balance in all things.

The thing is I am never sure if the problem is they won't make a profit or not enough profit

Coming from a relative who worked for Esso since he was 16 and was made redundant from the refinery he worked at in his 50's, and it seemed the latter, as they were still making massive profits. His job was still needed they just wanted to package out maintenance to a private company even though attempts at this before lead to fuck ups and additional injuries.

Lightening Only StrikesOnce …. On the subject of workers rights that you brought up, I would insist that we do have to compete internationally, but if we get it right ‘the worlds our lobster’, and somewhere within what you called “my long winded reply”, I think I prove conclusively with examples, that the level of rights/protection you probably want, is counterproductive to the potential levels jobs/employment – even if you don’t want to take it in. lol

Within the 1970’s UK decline, the oil shocks from 1973 due to Middle East wars was certainly a factor, but why not so damaging for all industrial nations?

The conditions in the 1970’s were far different the those in 2008, we had the UK Treasury advising governments to keep priming the monetary pumps, even when inflation was high around 20% and in an price/incomes/inflation upward spiral.

And by 1979 and The Winter of Discontent we had tax levels too high - if memory serves 32p lower rate income tax, 60-80p higher income tax and 90p tax on unearned income - fuelling more labour strikes with many millions of industrial productions days lost.

So if you were a UK company in the 1970’s, trying to price your exports to compete with Germany and Japan with our 20% wage inflation, borrowing costs at similar, frequent strikes disrupting orders & deliveries, and needing to additionally afford Research & Development while paying a 50% Corporate – with that UK ‘perfect storm’, is it any wonder our manufacturing base declined vs others, when the economics model in the UK was so anti business/investment? Still blame ‘bloody Thatcher’, from 1979 after so much damage had been done, everyone else does.

As to 2008 compared with 1970 we were no longer an economy so reliant on manufacturing, bearing in mind we had lost 1 million jobs a few years BEFORE the financial crash even began.
www.independent.co.uk/news/business/news/million-factory-jobs-lost-under-labour-6150418.html

In 2008, unlike the 1970’s, the economic recession followed a financial crash, so the transmission of loans/credit to any company needing to pay bills, never mind expand dried up, while regulators and successive governments were trying to bring in measures to ensure banks did not lend too much, making matters worse, when that (black) horse had already bolted.

And (similar to the 1970’s) although the Bank of England was pumping money into the banking system, a Base Rate of 0.50% rather than the 20% of those good old days, eased pressures on the private sector, many in the Service Sector, to shed jobs.

But shed jobs they did, and if you want to see why the jobs market in the UK was ‘fixed’ in an unsustainable way, please look at the 4th graph below, indicating the stronger growth of the public sector jobs over the private sector PRIOR to the crash (many in quangos and ‘non jobs’) – in particular in 2008, when the government ‘creation’ of state jobs, matches the spike down of private sector jobs.
www.bloombergview.com/articles/2014-12-22/uks-holiday-cheer-in-four-charts

This is a perfect example of 1970’s monetary foolishness that if you just throw money at an economy to provide unsustainable ‘growf’, rather than ease the pressures on businesses/private sector, something will turn up to rebalance the economy – but results in a honking great Budget Deficit, especially if many exporters went boobs up by 2008, needing the capital markets to help annually finance.

There is an old market adage; ‘governments run out of money before markets do’. As the Conservatives found out in the early 1990’s, trying to keep Sterling pegged to the (then) European Rate Mechanism, at too high a rate.

P.S. I know “jobs” is in the title, but maybe this thread should get back to the oil market.

The price of UK (Brent) oil is clearly not out of the carbon based woods yet, and still below the $60 price that triggered oil company cuts in investment and staff, but it does look as if the market WAS oversold and looking to settle within a price range more conducive to industry wide stability, than thought just a few weeks back.

www.cnbc.com/id/102402892
”Meanwhile Brent was up about $1 at $58 a barrel on Friday.”

”Brent futures were headed for about a 10 percent gain on the week, the biggest increase since 2011, and 19 percent over two weeks, the largest since 1998.”

”Still, the price rebound has come at the expense of sharp market volatility.”