The Daily Need

Energy jobs vulnerable to boom-bust cycles

Workers at a Range Resources site are seen behind the top of a pump where the hydraulic fracturing process in the Marcellus Shale layer to release natural gas was underway in Claysville, Pa. Photo: AP/Keith Srakocic

At campaign rallies across the country, both the Romney and Obama camps have stressed the energy sector as the industry that offers perhaps the most promise for business growth and employment opportunities in the United States today.

Republican presidential candidate Mitt Romney has campaigned hard on this issue, promising federal support for energy development in resource-rich swing states like Pennsylvania and Ohio, where the natural gas boom has brought a sense of economic optimism to rural towns across the region. Not to be outdone on the energy jobs front, President Barack Obama endorsed natural gas drilling and the controversial process of hydraulic fracturing in his 2012 State of the Union address, saying “nowhere is the promise of innovation greater than in American-made energy.”

While job creation is a big political selling point for oil and gas companies looking to sway state and federal officials on lessened regulations and corporate tax breaks, the blue-collar employment opportunities offered are sometimes short-term, contractual jobs. Moreover, even the natural gas industry — a thriving business by most accounts — has started to cut back on capital-heavy operations and hiring as the price of natural gas has fallen.

Need to Know spoke with Jim Fuquay, business reporter at the Fort Worth Star-Telegram, who has been reporting on recent job cuts by industry giant Chesapeake Energy in North Texas. The Oklahoma City-based firm said Tuesday it will cut 70 employees as it reduces its presence in the Barnett Shale play.

While overall employment numbers have been steady in the region and remain above the national average, Fuquay said that the frenzy of 2008 — when companies bought up downtown office buildings and land lease signing bonuses peaked — has certainly passed. “It’s a boom and bust industry,” he said. “It always has been.”

Oil and gas production doesn’t employ quite as many people on the ground as one might think, Fuquay said. Each drilling operation is extremely capital intensive, and much of the money spent goes toward steel, cement, supplies and machinery. On an active rig site, there are around 20 people employed, but those numbers fall once the drilling ends.

“There aren’t as many jobs in maintaining a well as there are in doing everything that leads up to drilling it, he said. “Leasing the land, preparing the drill site, drilling the well, doing the fracturing, after that you might have a person who’s responsible for going around and checking on the drill sites and making sure that everything is going right. But at some point it’s not a drilling boom anymore.”

These boom and bust cycles are deep-rooted in the energy extraction industry, but jobs promised by alternative energy development can also be tenuous.

This past May, Need to Know reported from Greenville, Mich., where back in 2006, solar panel manufacturing company Uni-Solar was set to build a series of local factories after receiving multimillion dollar tax incentives from the city and state.

Uni-Solar promised multiple state-of-the-art facilities that would create 800 jobs. But as the recession hit, the demand for solar panels decreased and the company scaled back production in Greenville. Of the employees hired before the recession hit — 422 workers at the peak — hundreds were laid off in 2011. In February, Uni-Solar’s parent company Energy Conversion Devices, Inc filed for Chapter 11 Bankruptcy, and announced plans to shutter the Greenville plant permanently.

Watch Need to Know’s report on the downward spiral of Uni-Solar, which takes a closer look at the problems the solar panel company brought to an already-beleaguered city: Greenville, Mich.

Watch It’s not easy being green on PBS. See more from Need To Know.

 

Comments