How Will Dropping Oil Prices Impact the Texas Job Market?

Oil prices have been dropping in Texas through the end of 2014 and into 2015, to an estimated amount of $83 million per day lost over six months in potential revenue for the state, according to a report by the Greater Houston Partnership. Just as Texas experienced economic growth during the oil boom, the falling oil prices and demand are expected to have wide-reaching effects for a projected two years and impact the Texas job market in a variety of ways:

Decline in Job Demand

Economist Karr Ingham, who analyzes economic indicators to develop the monthly Texas Petro Index, went on record in February 2015 and stated the Texas job market is likely to lose approximately 300,000 jobs both directly and indirectly related to the oil and gas industry. Fortunately, the industry accounts for around three percent of Texas’ nonagricultural job sector, so the impact won’t be disastrous state-wide; however, companies in the oil industry may have to reevaluate their employment strategies and consider layoffs or other budget cuts.

Reduced Profits

Dropping oil prices, as well as a lowered demand for oil-industry services, will presumably lead to an overall trend of dropped profits for oil related companies. For instance, Exxon Mobil Corporation, which is based out of Irving, Texas, reported 2014 fourth-quarter profit losses of 21 percent. With estimates of over a year before oil production slows enough to impact prices, businesses will need to think of ways to cut budgets in order to remain financially stable.

Uncertain Outlook

Since it is not known exactly how much more oil prices could potentially plummet, oil industry businesses face the unenviable task of attempting to plan without knowing much detail about what is in store for the near future. When planning for their employment needs, businesses may find contract workers or short-term temporary employees as more suitable options than strictly a full-time staff –  until they have a better idea of how their overall company will perform through the price dropping.

If dropping oil prices have impacted your Texas business, Professional Alternatives can be a trusted resource to keep your business on track while staying within budget. Since 1998, we have been serving Texas employers with their staffing needs. We offer temporary staffing, temp-to-hire, and direct hire placement so you can find the most qualified candidates while maintaining flexibility. Contact us today to learn more about our business services.