HOUSTON, TEXAS — The world’s second largest energy explorer, Chevron Corporation (NYSE: CVX) continued its pattern of layoffs amid an oil glut that has plagued large and small firms alike since mid-2014. Hundreds of the 4,000 employees set for layoffs this year reside in the Houston metropolitan area.
Since 2014, the company has planned to shed 7,000 from its overall workforce, accounting for 10 percent of its payroll, according to the Houston Chronicle. The company stressed the moves were designed to “revise organizational structures” and create new efficiencies as the market continues to correct.
Laid off employees can expect six weeks of transition pay and other severance packages, according to the Houston paper.
Geopolitical conspiracy theories about some oil-producing nations trying to harm others aside, a simple case of surging supply forced the price per barrel downward 70 percent in past years. The advent of hydraulic fracturing, commonly known as fracking, helped double outputs in well-established oilfields across the nation while OPEC and other petrostates maintained production levels despite softening global markets and new efficiencies in automotive technologies. Even though profit margins in new drilling have practically disappeared, the U.S. Bureau of Ocean Energy Management garnered $156 million in high bids for 693,962 acres in the Central Planning Area of the Outer Continental Shelf near Louisiana, Mississippi and Alabama, according to a March announcement. The Bureau is scheduled to proceed with new leases in the area spanning the years 2017 to 2022 in the weeks ahead, according to the Associated Press.
The reemergence of Iran as a competitive producer in the wake of the notorious nuclear agreement negotiated by the Obama Administration will likely generate increased daily output as local companies adopt more recent technologies with related economic sanctions no longer in place.
Despite Houston’s longstanding reputation of being captivated by oil, the highest rates of industry exposure in terms of population reside in some of the Lone Star State’s medium-sized cities. According to recent Dallas Federal Reserve analysis, Houston ranked ninth out of 21 metropolitan statistical areas across Texas. The Bayou City’s six percent share of the state’s oil and gas sector pales in comparison to Midland’s 28 percent, the highest overall. Odessa came in second with 15 percent exposure. Communities in the Permian Basin and Haynesville shale plays rank the highest according to the research.
Compared to other states, Texas has fared better than Oklahoma, Alaska, Louisiana, Wyoming and North Dakota in terms of total employment losses, according to the Dallas Fed. The U.S. Bureau of Labor Statistics notes that Texas’ unemployment rate for February 2016 registered at 4.4 percent.
At the time of publication, the international benchmark for oil pricing, Crude Oil Brent is trading for roughly $40 a barrel — far from the $95 prices seen in early 2014.
Logan Churchwell is a founding member of the Breitbart Texas team. You can follow him on Twitter @LCChurchwell.
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