U.S. Oil Majors Slash Jobs Despite Trump’s Fossil Fuel Push
- ConocoPhillips, Chevron, and other oil majors have announced mass layoffs despite expanding production capacity through multibillion-dollar acquisitions.
- Falling oil prices and cautious investor sentiment are forcing companies to cut capital spending and reduce workforces, even as Trump pushes pro-oil policies.
- OPEC+ production hikes and U.S. rig declines point to continued pressure on American producers, who require higher oil prices to resume growth.
As the United States President Trump administration encourages oil and gas companies to increase production, introducing a wide range of policies to support the expansion of fossil fuels, several U.S. companies are announcing widespread job cuts. Despite major oil and gas production expansion in the U.S. over the last few years and the potential for further growth, several oil majors have been forced to cut thousands of jobs over the last year.
Since the Covid-19 pandemic, we have seen the era of the “megamerger”, with several U.S. oil majors acquiring smaller companies and expanding operations at home and abroad. Since 2023, Chevron, Exxon, ConocoPhillips, and Occidental have all acquired smaller fossil fuel companies to increase their production capacity. However, in recent months, many of these oil giants have been forced to lay off thousands of workers in the face of lower oil prices to cut costs.
In September, Texas-based ConocoPhillips announced plans to cut up to 25 percent of its global staff, or as many as 3,250 people, most of whom would be gone by the end of the year. The firm currently employs around 13,000 people. Dennis Nuss, a company spokesman, said in a statement, “We are always looking at how we can be more efficient with the resources we have.” ConocoPhillips completed its $17 billion acquisition of Marathon Oil this time last year, significantly expanding operations, as well as increasing the number of workers under its management.
The Trump administration has introduced a plethora of new policies aimed at accelerating oil and gas permitting and enhancing access to federal land for exploration, moves that are expected to spur greater fossil fuel exploration and production in the coming years. However, some of these policies will take several years to come into effect. All the while, fossil fuel companies that have spent heavily on major acquisitions in recent years are battling low profits.
Although oil prices have increased in recent months, they are nowhere near the post-pandemic highs that were seen a couple of years ago. The average price of crude in the U.S. has been around $64 a barrel this year, meaning companies have been able to continue drilling but not make such a high profit as in previous years. This led ConocoPhillips' profits to decrease by 15 percent year on year, to $2 billion in the second quarter.
Earlier in the year, the United States' second-largest oil company, Chevron, also announced plans to lay off up to 20 percent of its workforce by 2026, which could amount to as many as 9,000 people. In May, Chevron laid off 800 employees in the Permian basin as part of cost-cutting plans, following 600 layoffs in California earlier in the month.
Chevron recently saw its license to produce oil in Venezuela revoked, which reduced its foreign crude production. However, the oil major also recently won its case against Exxon Mobil in a dispute over Hess Corp.’s offshore oil assets in the South American nation of Guyana, allowing it to complete its $53 billion acquisition of Hess and expand its Guyana operations.
Halliburton and the oilfield service company SLB also announced they would be reducing their workforces earlier this year. Lower oil prices have made 22 public U.S. producers in total – not including Exxon or Chevron – cut their capital spending by $2 billion, according to a Reuters analysis of second-quarter earnings announcements.
In recent months, the Organisation of the Petroleum Exporting Countries and its allies in the OPEC+ have fought to win back market share that was lost to the United States and other producers in recent years. After several years of strict quotas on oil output, OPEC+ announced plans to increase production by 137,000 barrels per day starting in October, which could drive down global oil prices. OPEC+ quota increases have already led to a decrease in international oil prices by around 12 percent this year, to just above breakeven levels for many U.S. oil companies.
The number of U.S. rigs in operation has fallen this year, by around 69 to 414, according to Baker Hughes. Kirk Edwards, the president of Texas-based Latigo Petroleum, said, “We've gone from ‘drill, baby, drill' to 'wait, baby wait’ here in the Permian.” Many U.S. producers are waiting for oil prices to increase before they raise production, requiring between $70 and $75 a barrel to put rigs back into operation.
The decision to cut spending by many U.S. oil and gas majors, which follows a post-pandemic era of megamergers and high spending, has resulted in widespread job cuts. As OPEC+ looks to increase production in the coming months, we can expect the low oil price trend to continue, likely resulting in low profits for several U.S. companies, and cautious spending plans are expected for the coming months.
By Felicity Bradstock for Oilprice.com
U.S. Oil Patch Sheds Jobs as Producers Face Weaker Prices
U.S. shale jobs fell 1.7% in August.
- Producers slow drilling, defer completions, and push efficiency after a ~12% YTD oil price slide.
- Chevron plans a 20% workforce reduction and ConocoPhillips up to 25%, even as companies try to maintain output with lower capex.
The U.S. shale patch is seeing the deepest jobs cuts in three years as producers respond to lower oil prices with slowing drilling activity and greater efficiencies through consolidation and cost cuts.
Employment in the industry fell by 1.7% in August, per data from the Bureau of Labor Statistics (BLS) cited by Bloomberg.
In contrast, total U.S. nonfarm payroll employment changed little in August and has shown little change since April, BLS said in its most recent publication. In August, employment in mining, quarrying, and oil and gas extraction declined by 6,000 after changing little over the prior 12 months, the BLS data shows.
The number of jobs in the oil and gas sector has fallen to levels last seen in 2022, when the shale patch faced another oil glut.
This year, oil prices have declined by about 12% year to date, and analysts and industry executives expect there is room for further slides amid a market oversupply expected to materialize as soon as the fourth quarter.
U.S. oil producers are on the hunt for consolidation, synergies, efficiencies, and cost cuts to be able to sustain shareholder payouts at U.S. oil prices in the low $60s per barrel, and possibly lower later this year.
As the price of oil is dangerously close to breakevens for many smaller independents, the U.S. shale patch is in a wait-and-see mode. U.S. oil producers are trimming capital expenditure budgets, relying on efficiency gains from current drilling activity to keep output levels.
They expect to ride the price decline with minimal tweaks to strategies, for now.
The first tweaks include deferring well completions and pumping more with less—meaning jobs have to go.
The biggest producers are cutting headcount, too, in the thousands, following blockbuster acquisitions in recent months.
Chevron, which bought Hess Corporation for $53 billion, has said it would reduce its workforce by 20% by the end of 2026 as part of wide cost cuts. This includes 800 jobs in the Permian.
ConocoPhillips, which acquired Marathon Oil Corporation last year, plans to slash workforce numbers by up to 25% across functions and geographies to simplify the organization and cut costs.
Various industry associations have also flagged reduced job numbers in the U.S. oil patch, although they remain generally upbeat about the future prospects of the sector.
Yet, the number of oil and gas upstream jobs in Texas and total U.S. oilfield service jobs has dropped in recent months amid lower oil prices and slowing drilling activity.
Data from the Texas Workforce Commission showed upstream oil and natural gas employment fell by 1,400 in July compared to June, the Texas Oil & Gas Association (TXOGA) said in August.
June’s job loss has been revised to 1,500—less severe than the previously estimated 2,700. Despite declines over the past two months, year-to-date growth remains positive at 4,300 upstream jobs, TXOGA noted.
“Forecasts for lower prices can slow industry growth plans,” commented TXOGA President Todd Staples.
“With approximately 8 bcf/d of new LNG export capacity under development in Texas and multiple infrastructure projects announced, we are optimistic stable global market conditions will strengthen short-term demand and reinforce our energy workforce,” Staples added.
The August jobs report by the Energy Workforce & Technology Council found that the labour market continues to soften across both the energy services sector and the broader U.S. economy.
Total jobs in the energy services sector fell to 628,062 in August, down by 6,021 positions from July, according to preliminary data from BLS and Energy Workforce analysis.
“While the sector experienced a sharper decline this month, we are continuing to see companies adapt with long-term discipline and strategic focus,” said Energy Workforce president Molly Determan.
“This slowdown reflects broader economic pressures, but the foundation of the energy services industry remains strong,” Determan added, noting that stability and resilience are now the key focus of the industry.
“Companies are operating with resilience, embracing efficiency and preparing their workforce for the demands of an industrial economy. Our members are focused on stability today and strength tomorrow.”
By Tsvetana Paraskova for Oilprice.com
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