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Fossils Move Toward Jobless Recovery as Oil Prices Inch Higher

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Canada’s oil and gas industry is on its way into a jobless recovery, with fossils responding to marginally higher global prices by looking to restart their operations with lower labour costs, according to a survey by Ernst & Young and the Haskayne School of Business.

The study “reflects a widespread expectation in the oilpatch that the oil price recovery is likely to be a jobless one, where companies—spooked by continued commodity price volatility—continue to focus on cutting costs,” the Financial Post reports. Despite oil prices “recovering” more than US$50 per barrel, companies that have already slashed their work forces by up to 50% may still be considering further reductions.

We’re seeing changes around, is there a better way of doing this? Is there a better way of organizing how we get work done?” said Lance Mortlock, EY’s Canadian oil and gas strategy services leader. With options like robotics and process automation on the table, he added, fossil executives are looking at “different ways that you can do work—better, faster, cheaper—with fewer people involved.”

Of the 72 companies in the survey, 80% had gone through staff cuts, and 9%—mostly in oilfield services and upstream exploration—laid off more than 50% of their work force. The fossil price crash cost Alberta 30,000 direct jobs.

The Financial Post report is consistent with the trend in Texas, where the New York Times says the fossil industry “is embracing technology and finding new ways to pare back the labour force.” With oil prices beginning to recover, West Texas oil fields have been gearing up their operations. But “while there is a general sense of relief in the oilpatch that a recovery is gaining momentum, discussions at company meetings and family kitchen tables are rife with aching worries, especially among those who are middle-aged with no more than a high school education.

The Times profiles Eustasio Velazquez, a blue-collar worker who spent 10 years laying cables for seismic companies conducting seismic tests for the fossil industry. He was replaced by what the New York newspaper describes as “cheaper, more reliable automated tools” in 2015, and now, “I don’t see a future,” he said. “Pretty soon every rig will have one worker and a robot.”

In a post by Climate Progress founding editor Joe Romm, one fossil executive put it even more starkly. “To me, it’s not just about automating the rig,” said Ahmed Hashmi, head of upstream technology at BP, in a recent Bloomberg interview. “It’s about automating everything upstream of the rig.” Romm cites Bloomberg’s conclusion that “automation means wells need only five workers, down from 20.”

The U.S. lost 163,000 jobs on the fossil price crash, including 98,000 in Texas, the Times notes. “Oil and gas workers have traditionally had some of the highest-paying blue-collar jobs—just the type that President Trump has vowed to preserve and bring back.” But the character of the available jobs is shifting.

“As in other industries, automation is creating a new demand for high-tech workers—sometimes hundreds of miles away in a control centre—but their numbers don’t offset the ranks of field hands no longer required to sling chains and lift iron.

And as it turns out, that’s fine with many of the workers involved. Although several thousand have returned, “experts say that between a third and a half of the workers who lost their jobs are not returning,” writes reporter Clifford Krauss. “Many have migrated to construction or even jobs in renewable energy, like wind power.