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Thursday, May 23rd, 2013 |
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Forget Peak Oil, Time To Worry About Peak Oil Labor
In a recent working paper, researchers at the the IMF (International Monetary Fund) attempt to reconcile the Peak Oil debate that whether resource constraints will dictate the future of oil output and prices, or advance in technology motivated by high oil price would eventually provide a solution to more production, as well as higher oil prices.
An economic model was developed incorporating both views, and identified two biggest factors contributing to the recent run-up in oil prices:
The paper also gives out this dire warning:
In general, various forecasts by different agencies seem to agree that world oil production will likely continue to have small increases with producers venturing out to exploit the more difficult and challenging formation. However, what most forecasts as well as the IMF paper did not discuss is the scarce human capital that’s already seriously plaguing the oil industry, which could have serious implication in the future oil production and technology development. With the aging and retirement of the boomer generations that began their careers in the late 1970s (see chart below), the oil industry is suffering an acute shortage of experienced skilled professionals.
This will only add to the cost of an oil barrel and become very disruptive (see graph below) as oil projects are getting more complex, more difficult and expensive to execute.
A separate study by the Petroleum Human Resources Council estimates about 39,000 workers will be needed in Canada along to replace those who are expected to retire before 2020 just to maintain the status quo. The industry could need as many as 130,000 new hires by the end of the decade with more bullish oil and gas prices. Already at least one analyst firm is scaling back its drilling activity forecast for 2012, in part because there aren’t enough workers who can drill big, complicated wells. For now, NES Global Talent sees a depletion of skilled workers in oil and gas fields in the United States, Great Britain and Australia, three of the busiest oil and gas regions, will become a major problem. Schlumberger, the largest oilfield services company in the world, sees significant negative effect from peak oil labor manifesting by 2015, a short three years from now, with increasing inexperienced oil professionals, and that the talent problem will only get worse. For now, most forecasts expect crude prices would remain high in 2012, mostly due to the Iran tension. Meanwhile, OPEC just revised its 2012 world oil demand outlook slightly upwards citing a stable US economy and the shutdown of nuclear plants in Japan. So if the IMF prediction comes true, it seems the peak oil labor could be just enough to tip the scale for doubling in oil price scenario a lot sooner than year 2022. The future will not be easy. For an in-depth analysis of the IMF working paper, check out IMP Paper: The Impact of Oil Price on GDP Delivered by The Daily Sheeple Contributed by of EconMatters. Please share: Spread the word to sheeple far and wide
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Labor shortages? Maybe corporations should get back into the business of investing in human capital instead of trolling the globe for the cheapest labor. I thought robots were going to do our jobs.
Recently I applied for a position I discovered on USA Jobs with a Government contractor. The qualifications for this position read like they were taken from my resume. Exactly! So I line up an interview and as I am being questioned by the Human resources guy, in walks the/my first line supervisor. He is handed my resume and he flips through it as the other guy and I talk. He is looking at a page and he says “shit this guy was working before I was born.” I look at the other guy (he and I being about the same age) like what in the hell am I supposed to do with that? I just shook my head, I new with that comment I was done. And yea, I know what you are thinking, don’t say it. There’s no point in it!
Not getting that job made me sick. But it taught me a lesson. Do not depend on others for your well being. Now I have a small machine shop at my place. I fly way under the radar. No accounts, no advertising, no employees, no time clock and I never have to cash a paycheck. Trained professionals will do for themselves. We’ll just see who outfoxes the fox.
The only hiring is so a corporation can get a tax break or incentive.
Schlumberger?? Going with their charts? Are you guys insane? They’re the cheapest bastards when it comes to pay. The reason to the skills shortage- corporations are not hiring young folks to be mentored into the field of expertise the corporation will be short in the future. To them, it’s the bottom line, nothing more. Corporations think skilled labor can be replaced instantly. That is not the case and it does comes back to bite them in the long run. Oh well, let them figure it out.