Other men bought big houses or new pickups with their oil money. Mike Gillham bought his favourite bar. He heads there most nights, to throw darts with his regulars, to smoke Camels and sit with his wife and wonder how to keep getting by, now that his oil job is gone.
Four years ago, Gillham stumbled upon what is more or less an economic lottery ticket for an American man whose education stopped after high school. It paid more than any other gig he’d had — more than all three of the jobs, combined, that he’d been working simultaneously before a buddy called and invited him into the well-paid world of the oil and gas industry.
The crash in global oil prices late last year, with oil prices plunging from nearly $110 to about $45 for a barrel of West Texas crude, burnt that lottery ticket. Gillham and thousands of men like him lost their jobs.
“It was like somebody knocked the wind out of you, a little bit,” Gillham said.
The collapse in oil prices came as a surprise to the nation’s oil workers. While there had been booms and busts before, this was supposed to a sustainable renaissance in American energy. And though oil has bounced back a bit — to about $60 a barrel — the pressure on American oil drillers isn’t subsiding.
Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries has announced they would continue to pump 30 million barrels of oil a day, the latest recent instance of the group breaking with a long-running strategy of reducing supply when prices fall. New US jobs data indicated that another 17,000 jobs in and around the oil and gas industries disappeared in May.
While falling gasoline prices have helped American consumers save more money and dine out more often, they have been punishing for a set of workers who have been especially reliant on the oil industry for jobs.
The industry, after all, had offered the rare prospect of good-paying jobs to American men with no education beyond high school — men who spent two decades seeing economic opportunities battered by the twin forces of globalisation and factory automation. Now, for many of these men, that prospect is fading.
“They’re going to have to take lower-paying jobs,” said Lynn Gray, director of economic research and analysis for the Oklahoma Economics Security Commission. “There’s going to be very few opportunities paying anywhere near what they’re making. That’s beginning to dawn on them.”
The plunge in oil prices has knocked more than half of the country’s oil and gas rigs offline, as companies shut down wells that can’t turn a profit at prices this low. Since November, 44,000 jobs in oil and gas drilling or supporting industries have vanished, according to the ADP Research Institute.
More than 9 out of 10 oil and gas jobs are held by men without college degrees. Their median earnings topped out at $65,000 a year in 2013, according to Census Bureau data, double what similarly educated men make in the overall economy.
Between 2008 and 2013, the median income for prime-working-age oil and gas drillers increased by 70 per cent, according to an analysis by economist Brad Hershbein, a visiting fellow at the Brookings Institution’s Hamilton Project.
Over the same period, in the economy at large, the median income for men with no more than a high school education fell by 6 per cent, after adjusting for inflation.
Only a few other sectors pay that well for men with such little education, according to Hershbein, including railroads, power utilities and heavy machinery installation. But none of those sectors have seen the same growth in pay or number of jobs.
When the energy sector began pulling back, there was nowhere comparable for those workers to go.
The son of a firefighter, Gillham went to work right away after high school, fixing engines. He was born and raised in windy Enid, where the economy has long depended on the drilling industry. Gillham graduated from his high school’s vocational track, specialising in diesel mechanics, but chose not to move east to attend junior college.
“I never really had a big desire, necessarily, to go to college,” he said. “I always said, I’ll take a year off and then go.”
Gillham bounced between a series of low-wage jobs after high school, never staying long in any of them. He worked 90 hours a week for barely more than minimum wage.
That all changed, as it did for so many men in the oil patch, when one of his friends told him about his new job at an oilfield construction company. They were hiring like crazy, he said, almost anyone with a clean record and a driver’s license. Gillham got the job straight away.
The industry was surging in Enid and across Oklahoma, a state that had ridden many booms and busts in the drilling business. Improved hydraulic fracturing technology — methods of injecting chemicals into the earth to shake fossil fuels loose — had made it possible for energy companies to extract oil and gas from fields that were previously thought to be tapped out. Rising oil prices made that extraction profitable.
From 2003 to 2014, the number of drilling rigs in the state doubled, to more than 200. The mining sector, which is largely oil and gas, added 30,000 workers, also a doubling from 2003. Mining support jobs rose from 15,000 to 36,000.
When he entered the oil-and-gas game, Gillham was on the support side, with an oilfield construction company. He fixed equipment in the firm’s shop.
The company paid overtime, and he worked a lot of it. After a year, he took a different job, with more stable hours, for a company that serviced drilling rigs to prevent them from corroding. His crew ranged among as many as 40 drilling rigs in southern Oklahoma, western Kansas and the Texas Panhandle. He earned promotions and was making $45,000 a year.
He stayed in that job nearly three years, the longest he has spent at one company. Then, global oil prices began to slide last summer as the boom in US production and a slowdown in global demand led to oversupply — and a decline in prices. Then Saudi Arabia, trying to nip the fracking industry in the bud, pumped more oil, to get prices going down.
Gillham experienced the effects. The drilling sites he serviced started shutting down, quickly. His crew dwindled. He thought he might be transferred to a new crew or to the corporate offices.
He didn’t think he’d be laid off, until his boss called on a Wednesday in January and told him that Friday would be his last day. He got two weeks’ severance.
When their oil money shut off, the Gillhams cancelled their extra cable channels, switched to a cheaper cell phone plan, planned more meals at home and kept a closer eye on the grocery list. They went without health coverage for several months.
After two months of searching for a job, he got one, a job pouring concrete for the city parks department, that pays half as much. “I can’t really complain about it,” Gillham said, “but it’s basically half what I was getting paid at my oilfield job.”
Thousands of men suffered similar fates. Oklahoma has lost nearly 8,000 mining jobs since November, or about 1 in 8 jobs in the sector. It has seen a 30 per cent increase, compared with a year ago, in new claims for unemployment benefits.
In Enid, foreclosures are also up, and so are court filings for missed child-support payments, according to social workers in town. There are job openings around town, but they typically pay closer to minimum wage than oil wages.
A caseworker at CDSA, a downtown Enid non-profit that serves the poor, said recently that she’d just seen someone who had lost a $40-an-hour job and taken one that pays $8 an hour.
“I see people who are being evicted. I see people who are homeless,” said the CDSA housing coordinator. “People think the money’s going to flow forever, and of course it does not.”
Washington Post
