OPINION: The fallout from the oil price crash is devastating when seen from the perspective of industry workers or oil-dependent economies and regions.
Wherever data is available, it tells the same tale.
Trade body Oil & Gas UK earlier this year warned that 30,000 jobs in the UK could be lost to low oil and gas prices and the impact of the Covid-19 pandemic.
Since then, global job losses of some 20,000 have been announced at BP and Shell alone.
A recent Deloitte report on the future of employment in the sector found that 107,000 oil, gas and petrochemicals jobs were lost in the US between March and August.
Resistance is difficult, as was seen with the rapid collapse of Mexican President Andres Manuel Lopez Obrador’s plan to force Pemex to invest billions of dollars in expanding crude production and refining.
The rise and fall of US unconventional production may give the impression that the oil industry has a phoenix-like ability to roar back to life with new demand, but chronic under-investment could push many reservoirs past the point of no return.
There is a growing belief, especially in Europe, that Covid-19 merely hastened a move away from fossil fuels.
Even if talk is premature of passing peak oil demand, prices are likely to remain depressed for some time.
The industry is clearly facing its greatest crisis to date, but do we really understand where the impacts of Covid-19 end and where the energy transition begins?
Politicians are inclined to promise millions of new jobs in cleaner energy, but they are thin on detail.
Oil workers can be adaptable, but if the established generation is to retool for renewables, this will require concerted action across industry and governments — and all on an unprecedented scale.
Paradoxically, there is also concern about a lack of skills in a decimated oil sector.
The deeper shift toward digitalisation may make skills more transferable than in the past.
Some analysts doubt whether technologies such as carbon capture, utilisation and storage or blue hydrogen can stand up to the real economics of energy, especially when considering populous nations such as China.
A strong post-Covid-19 recovery could find the oil sector struggling to cope with the collapse in investment.
BP’s recent Energy Outlook acknowledged the risk of a shortfall stoking demand for coal in fast-growing Asian economies, although the company’s own view of future energy dynamics seems more benign.
The retreat in BP’s stock price since it detailed its plans suggests the markets may be seeing something amiss with its promised focus on renewables.
Yet the markets seem equally unimpressed with the ExxonMobil strategy of sticking with hydrocarbons.
Shell’s approach of adapting and hedging appears to have gone down better with the investment community — investing heavily in decarbonisation but sticking with deep-water oil and gas production.
In one of Shell's key regions, Brazil, layoffs appear to have stabilised and relatively few projects have been cancelled. Which brings us back to jobs.
The growing unpopularity of the oil industry also makes it more difficult to attract graduates, although the deeper shift toward digitalisation may make skills more transferable than in the past.
As Deloitte noted, companies of all stripes will be competing to attract young people with the skills to supply energy in a highly digitalised and lower-carbon world.
(This is an Upstream opinion article.)