100 Chevron Layoffs in January, 200 More Job Cuts to Follow Throughout 2018
Chevron Corporation (NYSE:CVX) announced it is laying off 100 employees working for the Chevron San Joaquin Valley business unit. The earliest layoffs will start is on January 29, 2018. In Bakersfield, 53 people are being laid off at Chevron’s office at 1546 China Grade Loop.
These layoffs, which will ultimately affect 300 employees, were first announced in October when Chevron said it was laying off or reassigning 26% of its Central California workforce. This, as well as other oil company layoffs, are a result of depressed crude oil prices, which have fallen by almost 50% over the last three years.
Chevron announced that its first set of layoffs, which are part of the San Joaquin Valley Business Unit reorganization, will start in January 2018. Around 100 employees working for the San Joaquin Valley Business Unit, which is headquartered in Bakersfield, will lose their jobs.
These layoffs are part of broader layoffs announced back in October. The company said it would reduce its San Joaquin Valley Business Unit by 26%, or around 300 employees. The remainder of the layoffs will occur throughout 2018.
Chevron is the largest oil and gas producer in California and has field and office locations in Kern County, Monterey County, and Fresno County. Employees working in the San Joaquin Valley Business Unit take part in “upstream” energy market. The upstream industry finds and produces crude oil and natural gas and is sometimes referred to as the exploration and production (E&P) sector.
Over the last two years, that division has posted losses of more than $6.0 billion. In 2014, oil prices were hovering near $100.00 per barrel. Since then, the price has plunged, and is down almost 50% at $57.00 per barrel. While oil prices have rebounded over the last number of weeks, most analysts expect crude oil prices to trade at or below $60.00 per barrel for 2018.
Chevron First Announced California Layoffs in October 2017
Chevron announced the current layoffs back in October, when oil was trading near $50.00 per barrel. The company said it was laying off or reassigning 26% of its Central California workforce. The regional division includes employees of all disciplines, from engineers to support staff.
Abby Auffant, a spokesperson at Chevron, said the number of employees working in the San Joaquin Business Unit is always changing and wouldn’t provide a current estimate. She added that the exact number of layoffs will not be known until the end of 2018.
In 2015, when Chevron laid off three percent of its staff, it employed around 1,500 people. A reduction of 26% works out to more than 300 workers.
The oil and gas giant is gutting its staff because of depressed oil prices. This news comes after a difficult year for Chevron. In 2016, Chevron reported a $497.0-million loss; in 2015, it reported earnings of more than $4.6 billion.
More Oil Company Layoffs Expected in 2018
Depressed oil and gas prices could fuel additional layoffs in 2018 with many oil and gas executives predicting a dismal 2018. Around 66% of U.S. executives think crude oil prices will range from $40.00-$50.00 per barrel next year. This will be accompanied by falling rig counts and mounting job losses.
Of the 250 U.S. oil and gas executives surveyed, only two percent believe oil and gas will stay above $60.00 per barrel; in 2016, that number stood at a more optimistic 55%. As a result, the majority of respondents expect upstream spending to decline in 2018, further exacerbating job losses. In fact, 41% expect further layoffs in 2018.
That’s bad news for oil-dependent states like Texas, North Dakota, Alaska, California, New Mexico, and Louisiana. When oil prices fall and or remain depressed, the oil and gas industry cuts back on investment and expansion, and idles production, which results in massive layoffs. And low oil prices in 2018 will mean even more layoffs.
According to the U.S. Energy and Employment Report, the traditional energy and energy efficiency sectors employ approximately 6.4 million Americans. In 2016, these sectors added over 300,000 (net) jobs, or roughly 14% of all those created in the U.S. that year.
“Chevron employees targeted in layoffs given notice today, will keep jobs until after the holidays,” Bakersfield.com, November 30, 2017.
“Chevron Reports Fourth Quarter Net Income of $415 Million,” Chevron Corporation, January 27, 2017.
“U.S. oil industry fears more job losses in 2018, with prices stuck in US$40-US$50 range: survey,” Financial Post, October 12, 2017.