Processing Magazine

Labor shortage in US oil, gas sector to challenge growth

September 23, 2013

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Capital spending on downstream projects, especially in the Gulf of Mexico, is predicted to hit $100 billion over a period of three years and the supply of skilled workers to the U.S. oil and gas industry is expected to fall short.

Oil and natural gas production is standing at its highest level in years and this is leading to a rise in investments, as companies expand existing capacities or build new refineries and processing plants. While these predictions are certainly good news for the economy, industry experts are concerned that hiring qualified employees to operate the new facilities will become a challenge.

Speaking at an oil and gas industry event organized by marketing research firm IHS, industry representatives stated that although a labor shortage is likely to occur, the situation will not be as bad as it was in 2007, when demand for staff led to double-digit wage inflation. Instead, payments in the sector are predicted to increase by five to six percent through 2016.

RELATED: US oil production hits highest level in 24 years

According to the Texas Workforce Commission, about 267,000 people worked in the oil and gas industry in the state last year. Unemployment rates in the Gulf of Mexico states, including Texas and Louisiana, are below the average for the country, Fuel Fix reported.

Laura Hodges, director of IHS, forecast that cities with high unemployment rates, such as Cleveland, Las Vegas and Los Angeles, could potentially be a source of workers, at least during construction stages.