The job market is, like every other market, affected by the laws of supply and demand. When I graduated in June 2010, the West Texas Intermediate WTI crude price was $81.25. That was the lowest value oil would be at until October 2014 when the slide in oil prices which had huge effects on several economies, such as Russia and Venezuela, began.
I have never worked in the oil and gas industry. It’s not from lack of trying.Working for an oil company allows regular travel opportunities and travel has always been a huge motivation for me. Nominally, according to my undergraduate degree, I’m an engineer (though I haven’t worked as one for almost three years). Oil companies have more demand for engineers than several other degree specializations, yet whilst the oil price stayed above $100 for the vast majority of my job search, I was continuously out of luck.
However, I was not an exceptional graduate and was closer to the mid-level band of my graduating class than the upper percentiles. But, if we assume the rise in price of oil means more hiring, then we should assume there would be more engineers hired. I could have written it off as an anomaly that I was, at least in the oil and gas industry, passed over for jobs. I wasn’t the only one though, as several of my graduating class, with the same quality of Honours that I possessed, were not able to secure jobs or even training positions with an oil and gas company.
What does this mean? It means that oil companies have stringent criteria for hiring, as they should. In a technical field like engineering, when things go badly, it doesn’t just affect profits or share price but can affect the environment at large (such as BP in the Gulf of Mexico).
Whatever the price of oil, companies will not expand hiring greatly at the graduate level. There are too many oil companies who each have a stable share of the market to risk hiring below the “quality level” of graduate the industry has set. If there were a shortage of engineers, then perhaps there would be flexibility, but the supply of graduate engineers is very high in Trinidad. My graduating class of Mechanical Engineering had more than 100 students, with similar figures for other streams such as Civil and Electrical Engineering. There is ample opportunity for oil companies to select those elite graduates for their training programs since that supply clearly outstrips demand. The idea that engineering is always in demand is something that is frequently spouted at secondary school students, not just in Trinidad, but across most of North America. Even the USA, which has been speaking of a lack of engineers for years, could find itself with an oversupply issue (http://www.theatlantic.com/education/archive/2014/03/the-myth-of-the-science-and-engineering-shortage/284359/).
The market share for each company is usually stable as oil extraction is a long term process and the service companies are equally tied to long term contracts. With the current low prices we are no longer in times where we can use the word “usual.” The market turmoil should indeed cause redefining of previous market share and a possible turf war, especially for service companies such as Schlumberger, Halliburton and Baker Hughes. This is especially relevant for those people who already have jobs with those companies. But for graduates trying to get into those companies, it makes very little difference.
Unlike Canada or the United States, with oil sands and shale respectively, there is no huge discovery on the horizon in Trinidad (not least because the geographical area of our borders forestall it). There is unlikely to be increased hiring. In fact, despite the low oil price, the oil and gas companies in Trinidad have little reason to be anything but stable. The size of operations in Trinidad for any global oil company is a tiny fraction of their global revenue and costs and as such, cutting jobs should not make a huge difference to their profitability. This, of course, does not mean that there cannot be layoffs as earlier this employees in certain petroleum companies were given the option of Voluntary Leave. However, such a cost cutting measure would have little effect on overall cost reduction and is possibly a knee-jerk reaction.
For local companies there is likely to be a squeeze if oil prices remain depressed, but considering the unpredictability of oil supply due to political turmoil across the Middle East, Russia and Nigeria, it is entirely possible the supply contraction could raise the prices. Crude oil future prices show a slow rise this year into close to $47, which is still far below the $80 predicted in the 2015 budget (2016 budget is set to be released this month)- but it does still show oil on the rise. Companies in the notoriously volatile oil sector should always be prepared for sharp drops and have extensive risk management plans in place. Though local companies cannot go to the level of having a team of commodity traders in place such as Shell or BP do, a drop in oil prices (albeit a huge one) lasting one fiscal quarter should not result in massive difficulties unless the risk analysis was significantly mistaken.
The depressed oil price will have significant effects for the larger economy and probably knock-on effects in other sectors but it gives the opportunity to further avoid Dutch disease (http://www.investopedia.com/terms/d/dutchdisease.asp) which the government has been trying to do through the InvesTT program(http://www.investt.co.tt/targeted-sectors). I think the low oil price, if it continues, may raise short term issues but in the long run aid in diversification. This can only be beneficial - the oil industry has an expiry date.
The increased importance of existing industries coupled with the emergence of new areas of employment is the likely outcome of an oil industry that is no longer disproportionately dominant over the economy. The proportion of GDP created from financial services and manufacturing should be the first to show significant growth. This would be good news for engineering graduates due to the multidisciplinary nature of the application of engineering knowledge. A graduate with any engineering degree should easily be able to work in jobs which require mathematical knowledge such as operations analysis and financial analysis. Electrical engineers should find themselves beneficiaries to the increasing importance of software and programming knowledge, while mechanical engineers will benefit from a thriving manufacturing sector.
For graduates trying to find work in the oil and gas industry, very little is likely to change. The oil companies will probably still hire the top of the graduating class for their training programs and then send the best of the training programs to work abroad. Networking, as always, remains paramount. And the Catch-22 of work experience being the most valuable measure of hiring potential, remains as solid as ever. These things have never depended on oil prices and continue to be the most relevant points to keep in mind when looking for a job. Finding a way around them is another matter entirely.