On April 17th, oil producing nations including Russia and Saudi Arabia are scheduled to meet in Doha to discuss curbing production and resolving global oversupply. Hopes that such a resolution will be reached, however, have been all but dashed following recent comments from Saudi Arabia’s deputy crown prince that they will not freeze production unless Iran does as well. Iran—just coming off of crippling international sanctions—has already ruled out imposing production limits, thus making any deal now an apparent non-starter. Responding accordingly, U.S. oil markets have already fallen, ending a brief but fragile rally in prices that had been banking on a successful meeting in Doha.

These events are all-too reminiscent of previous failed attempts to reverse global oil’s current price collapse, including OPEC’s most recent meeting in December 2015 that ended without resolution, sending prices downward once again to below $40 a barrel.

With no foreseeable end to indecision and contentious politics in global oil markets, the impacts for the U.S. will be continued job losses and stranded assets in the domestic oil and gas industry. U.S. producers, who only recently had been a significant job growth engine for the post-recession economy, are now a leading source of job loss. This is not the first time oil markets have wreaked havoc on the economy and left people out of work, yet an alternative to the status quo exists. Transitioning to a cleaner, renewable energy system will create many benefits, not the least of which is strong job growth that can outmatch oil and gas in number of jobs created and long-term stability.

 

Global Oil’s Toll on U.S. Employment

Since oil and gas prices plummeted in 2014, the U.S. has lost to-date an estimated 100,000 jobs directly involved in the industry. The losses have hit workers both at the top and the bottom of the pay scale—from petroleum engineers making upwards of $150,000 a year to rig operators making $40-50,000 a year—yet they have been most disastrous for less-skilled workers who are often the first to be let go.

The spillover effects of these losses are numerous. There are the wiped out investments for the many who had been convinced by the markets to invest their savings in the shale oil and gas boom. There is also the emotional toll on workers and their families who have faced prolonged unemployment since initial job cuts began. Finally, it is estimated that each oil and gas job lost has a multiplier effect of 3.43 additional jobs lost in other sectors, putting the rough total at over 400,000 direct and indirect jobs lost nationwide.

 

A transition taking place

As supply of oil and gas jobs continues to decline, the renewable energy sector is in contrast experiencing sustained growth. The solar industry in the U.S. added some 35,000 jobs in 2015, and average wages within the sector are on the rise. The wind energy industry has also seen gains of late, and added over 20,000 jobs in 2014.[1] This growth is also projected to continue; according to the U.S. Bureau of labor statistics, jobs within these sectors are projected to experience growth well over the national average over the next decade.[2]

States like Texas serve as a prime example of where the transition from fossil fuel to clean energy jobs is happening within the very same region. While one of the worst hit states by the oil price crash, Texas is also the national leader in wind producing capacity, and solar capacity within the state grew by an estimated 30% in 2015 from the previous year. The reasons businesses and municipalities in the lone star state are encouraging this growth are often purely practical ones: increased job growth, falling costs for solar panels and wind turbines, and the state’s vast potential for solar and wind production rank high among them.[3]

 

A different kind of energy job

As this transition continues, clean energy jobs have the potential to not only make-up for but actually outpace losses in oil and gas jobs. Because renewable sources are more diffuse by nature and less concentrated in their methods of production and distribution, renewable energy can create more jobs per unit of energy produced than fossil fuels.[4] Put another way, while natural gas and oil fields are constrained by geography, sources like solar and wind require many discrete arrays of panels and turbines. This in turns leads to the development of a more widely distributed and flexible grid system rather than the static, monopolized grid the U.S. currently maintains. Renewable energy can also lead to greater stability in energy prices in the future; once up-front investments are made, renewable sources cost very little to operate and—in the case of wind and solar—the fuel is free.[5]

The push to switch to a clean energy system will not be inexpensive (at least in terms of up-front costs), and there will be winners and losers. Yet this has been the case for most if not all emerging industries that have fueled U.S. economic growth in the past.  The long-term economic benefits of renewable energy growth—including significant job creation—are real and already being realized across the U.S. Investors and policy-makers alike would do well to continue to foster this trend towards an energy sector that is secure, green, and not beholden to global market volatility.

 

[1] International Renewable Energy Agency (IRENA). “Renewable Energy and Jobs – Annual Review 2015.” http://www.irena.org/DocumentDownloads/Publications/IRENA_RE_Jobs_Annual_Review_2015.pdf

[2] U.S. Bureau of Lab Statistics. Occupational employment projections to 2024. http://www.bls.gov/opub/mlr/2015/article/occupational-employment-projections-to-2024.htm

[3] Breaking Energy. http://breakingenergy.com/2015/11/27/5-signs-of-texas-clean-energy-momentum-in-2015/

[4] Wei, et. all. “Putting renewables and energy efficiency to work: How many jobs can the clean energy industry generate in the US?” Energy Policy. 2010.

[5] Union of Concerned Scientists. “Benefits of Renewable Energy Use.” http://www.ucsusa.org/clean_energy/our-energy-choices/renewable-energy/public-benefits-of-renewable.html#.VuCpWJwrLIV

Photo attributed to: Eric Kounce

 


Tom H Cyrs is the current (spring 2016) Editor in Chief of Perspectives on Global Issues. He is currently pursuing a Master’s degree at the NYU Center for Global Affairs with a focus on international development and environmental policy. 

Written by Tom H Cyrs