Laborers in the US energy industry are nervously watching crashing oil prices as they wonder what persistently low prices could mean for their jobs.
According to a new report from The Sunday Times, energy giant BP has already begun laying off workers.
The good news is that laid-off workers might find an opportunity in another industry: the homebuilding industry.
Specifically, this is something we hear a lot from America’s homebuilders who say that new home sales would be higher if they could fill their job openings. Recent surveys from the National Association of Homebuilders reveal that labour shortages have only been getting worse for builders, subcontractors, and remodelers.
This is a bit ironic since the housing market bubble created tons of construction workers and the bust put them all out of work.
“The incidence of reported shortages is also surprisingly high relative to the current state of new home construction, which has only very partially recovered from its 2008 downturn,” said the NAHB’s Paul Emrath.
“Averaged across 9 key trades that have been consistently covered in NAHB surveys, 46 per cent of builders reported a shortage in 2014. This is the highest the 9-trade shortage has been since 2000 — slightly higher even than at the peak of the boom in 2004 and 2005, when the U.S. was averaging around 2 million housing starts a year, compared to current rates that have mostly remained under 1 million.”
Where’d Everybody Go?
The housing market crashed during a time when major technological advances in hydraulic fracturing sparked a boom in the US shale energy business. Suddenly, places like North Dakota, Pennsylvania, and Texas were booming thanks to their massive shale basins.
Unemployed construction workers found that many of their skills were transferable to the energy business. And the added bonus was the pay.
“In late 2008, oil and gas pipeline construction workers earned $US0.46 per hour more than new home framing contractors,” said Rick Palacios Jr. of John Burns Real Estate Consulting. “Today, they earn $US8.15 more per hour. It’s no wonder labour is tight in the new home market, especially in Texas and Denver, the closest major markets to North Dakota.”
Since the recession hit the US in December 2007, oil and gas construction jobs grew by hundreds of thousands as residential construction jobs fell be hundreds of thousands.
We’ve yet to see any major oil-crash-related layoff announcements in the US. Indeed, many drillers actually say activity is still going up.
However, should we eventually see layoffs, we can expect at least some of these folks to head to the housing construction industry, especially as low gasoline prices encourage more prospective homebuyers to buy.