Since the summer of 2014 we have seen a sharp decrease in the price of oil and this has really hurt the American oil industry and the American oil worker. There are many reasons for this, Saudi Arabia refusing to cut supply, better technology leading to cheaper supply and a slowing demand.
One of the big reasons Saudi Arabia decided not to cut supply is because new countries were entering the market and increasing production which threatened the country with vast oil reserves. One of these countries that increased production was the United States.
From 2007 to 2012 the United States oil and natural gas industry saw job growth of 40%. These jobs came in the form of drilling for the oil, extraction, production, surveying and support. Ancillary businesses like drilling equipment industries saw booms as well.
Unfortunately though, this sharp decrease in oil prices has hurt profits and forced massive layoffs in this industry. This cost cutting has resulted in over 50,000 job cuts in February, a 10 percent increase from February of last year. In January it was 17.5 percent in crease from the year prior.
Texas has been hit hard. The state lost a total of 4,100 jobs in January in the oil and natural gas industry.
The economy as a whole has continued improving. Though, oil companies and ancillary companies have been hit hard in stock market while the S&P has increased unabated. Over the last six months the economy has added 300,000 jobs and the unemployment rate fell to 5.5%.
Companies that rely on oil like airlines and transportation companies have seen good profits as their prices get lower. And as consumers save on gas they are spending those savings on consumer goods.
Analysts are predicting that oil will stabilize at a long-term price well below the highs of the last few years. Hopefully the economy will continue to add jobs to offset the job cuts in the oil industry.