How the Oil Industry Has Failed Its Own Workers

IF YOU drove I-10 through West Texas ten years ago, you would find one or two pumpjacks and plains of dead grass. The sparse and unpopulated landscape was a product of the desolate economy, comprised mostly of activities like “Animal Production and Aquaculture,” “Truck Transportation,” and “Support Activities for Mining.” Ten percent of West Texans made minimum wage or less in 2010, and the rest earned little more. But by 2017, the picture looked radically different. Thanks to the rebirth of the oil industry, just three percent of West Texans made minimum wage or less––an unprecedented change in the class makeup of the region. GDP per capita rose by ten thousand dollars from 2010 to 2015––a kind of change that hadn’t occurred in the area for decades.

West Texas shows us that America’s new oil economy influences more than stock charts and geopolitics: it also impacts the livelihoods of the communities around oil fields. And yet, large oil and gas firms have remained largely oblivious to their workers’ conditions. The oil industry may bring short-term prosperity to its workers, but it drags its employees along as if oil would guarantee their futures—which it certainly will not. This is the reality of America’s corporate-centric energy policy. 

This approach to the energy economy is not new: Texon, an infamous ghost town, embodies it almost perfectly. On May 27, 1923, two men working on-site heard an explosive sound coming from the wellhead and soon found oil pulsing from the well. The stream of oil into the air lasted for two weeks until the Texaco Oil Company got it under control. Word about black gold spread, and hundreds of families soon moved to the area. A school, post office, and jail were built. A local government was established, and the Texon Oilers, a semi-professional baseball team, became the pride of the Permian Basin. People all around West Texas moved to where the money was, and by 1933, an estimated 1,200 people resided there with many more employed.

As the well started drying up, management changed and the population began to shrink. Texaco, which brought in hundreds of residents with prospective economic opportunity, left as soon as profits began to dwindle. By 1962, the oil field was plugged and businesses were closed. And now, over fifty years later, Texon is a textbook definition of a boom-and-bust town. When the area was vacated, buildings were abandoned and left to the dry environment. The only building that remains today is the jail, built from stone instead of wood. (One may wonder why wood was used for the buildings in the town: did they know they weren’t going to be there for long?) In any case, the original site of the well remains a historical marker and nothing more.

Yet the relationship between reckless company owners and their employees continues after Texon. We might well be on the verge of another bust—COVID-19 has had catastrophic effects on the oil industry, and recent negative oil prices are projected to cause around one million oil and gas workers to lose their jobs. Given significant budget reductions, oil and gas companies have chosen where to cut spending, and those affected are oilfield workers—not corporate executives.

Not only are workers’ salaries exposed to a bust; their whole life savings are risked as well. According to the Employee Benefit Research Institute, the five biggest US oil producers held $44 billion of 401(k) assets for some 66,000 workers at the end of 2018, 36% of which was composed of company stock. The return on the five companies’ shares, however, has amounted to -44% since the end of 2018. It is clear that holding large portions of oil stock in your 401(k) is a bad idea. And yet, oil executives are fine with jeopardizing their workers’ futures by forcing them to buy in.

Oil industry decision makers are not the ones to whom their decisions matter most. Businesspeople and government regulators focus on short-term profit, or on how many consumers will buy their product, rather than how their policies impact workers. Even Inês Azevedo, an associate professor of Energy Resources Engineering at Stanford, argues that the goal of energy policy is to maintain a healthy relationship between energy consumption and economic growth. Much like executives and bureaucrats, policy experts are oriented toward market performance, rather than the fair treatment of workers. But if energy policy is to benefit everyone, then it has to incorporate the interests of more than just the people who can afford to control it.

There are many who argue that access to energy is a human right. In whatever form our fuel takes, its use is essential in ways both big and small: from the daily commute to technological progress. But this does not allow us to neglect the needs and rights of people who work to produce our energy. Hence, in examining energy use, we must look at how it is produced, the effects of its production, and how, to benefit the most people possible, we can find the optimal balance between production and use. The consequences of unsustainable corporate energy policy have far-reaching consequences for oil and gas workers as well as people at large, thanks to climate change. There are many ways of framing a new energy policy, but it must begin with the people in mind. Workers have suffered at the hands of energy policymakers for too long, and we must shape the future of energy policy to take everyone’s interests into account.

Bailey Nicolson

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