“Did you ever hear of a solar panel?”
That’s the question Sabrina Burns, a petroleum engineering student got from an Uber driver in 2018. She and some fellow students were headed to a petroleum industry banquet, and at the time it seemed a little silly. While many younger people questioned the wisdom of going into the oil industry, conventional wisdom held that the oil industry is a great career.
While students in other majors and other people she knew questioned the wisdom of being an oil major, her parents persuaded her to stick with the oil industry. Her father, who worked as a helicopter pilot, met a lot of successful women working as engineers on offshore oil rigs. On top of that, older generations probably have a harder time imagining a world in which the oil industry isn’t stable, lucrative, and essential to everyone’s lives.
2020 threw these older generations and any younger believers a curveball, though. “We got a slap in the face, an entirely unforeseen situation that rocked our entire mind-set,” said Ms. Burns when asked about her prospects by Clifford Krauss at The New York Times. “I have applied for every oil and gas position I’ve seen, like all my classmates, and nothing really has turned up. I’m discouraged.”
What was once seemingly invincible was now stumbling and couldn’t be counted on.
The biggest blow to graduating oil students was the sudden drop in oil demand due to the pandemic. Oil products like gasoline and jet fuel weren’t needed nearly as much because people worked from home, many businesses were closed, and travel was avoided. With all of this lost demand despite ample supplies, prices tanked.
With such low demand and low prices, the industry took a big hit. Over 100,000 people were laid off. Workers weren’t needed in the field to pump oil that wasn’t needed, and refineries were closed. Some oil companies even declared bankruptcy.
This stands in stark contrast to the better years, when these students started their college careers. The oil industry and the faculties of colleges felt they could promise great careers, with lots of job security and a good income. Under Donald Trump, shale drilling and “fracking” took off, and the United States became the world’s largest producer of oil. There had been booms and busts in the industry in the past, but those seemed to affect less educated field workers, and not people with engineering or geology degrees.
With these prospects gone, and future climate change issues seeming likely to hurt the industry even after the pandemic is over, oil students are looking at other options going forward. Sabrina Burns told The New York Times that she’s looking to intern in a related but different field, and that she may need to go back to school for a graduate degree in Environmental Science to have a better career. She is even considering moving in with family to make ends meet while recharting a new course for her career.
In the same article, Krauss goes on to interview a number of other students in the industry. Their stories are all pretty similar. Some expect the industry to bounce back, and are biding their time. Others are looking to take on a graduate degree while waiting, but are hedging their bets by majoring in something else for their master’s degrees.
One student actually landed a job, but the company is looking at diversifying to avoid future exposure to what could be a failing industry in future years. He is glad to have found a job, but worries that his education and skills he’s building won’t transfer well to other parts of the energy economy.
Some Things We Can Learn Here
Readers of CleanTechnica are probably having an “I told you so” moment reading this. People following the energy industry could see that renewables, battery storage, and other technologies aren’t competing with oil just yet, but have a much brighter future than oil, which isn’t growing. Oil is still big, though, and has a lot of inertia, so it’s not going away now or even in the next four years under Biden and then likely Harris.
What many (even among us) didn’t foresee was how oil’s newfound weakness would leave it more vulnerable to crises, like the one we currently face with COVID-19. Oil is weakening and growth has less potential than ever, but at the same time it wasn’t shrinking. A sudden jolt in demand for gasoline, jet fuel, and diesel hit them hard, though.
Few people fully avoided the impacts of the tsunami of COVID, but electricity is a lot more diversified. In my home, we use electricity for heating, cooling, and most of our driving. We use it for lighting, entertainment, cooking, and security. The cats and dog even have toys powered by electricity. When we turn on the tap, electric pumps somewhere else in town provide the pressure. LED street lamps light the street in front of our home.
Sure, I drive a lot less now not taking the kids to school, but our overall power bill didn’t take a huge drop.
On the other hand, our use of gasoline took a HUGE hit. In the last nine months, we’ve spent far less than $200 on the stuff. The occasional trip to the next town makes our Nissan LEAF struggle for range, and we’ve driven there on gasoline power only twice. The prior year, we probably did this dozens of times. Trips to see family, where we need to pile the whole family into the family SUV, are also a lot more rare. A tank of gas used to last one to two months in those vehicles, but now last three to four, if not more.
We don’t use gasoline for anything else, so oil companies are taking a much bigger hit than companies involved in electricity generation, whether they’re renewable or fossil fuel-powered. Even when fossil fuels are used to generate, very few power stations run on oil. Natural gas is far more common, and comes from a related but different industry than oil.
Another important lesson we can find here is that it’s wise to question the prevailing narrative. Yes, oil has been very strong in the past, but that doesn’t mean it will necessarily be strong in the future. No industry is a sure bet, but this was an area where generational bias caused parents to mislead their children into a bad career move.
This is no trivial thing. Most of the students will go on to find another career, and some will eventually succeed in oil as the pandemic ends. However, they’ll still have tens of thousands of dollars of debt that they wouldn’t have had, and a harder time servicing that debt than they would have had if their parents had been more forward looking.
Oil is Not Invincible
On the other hand, there’s a silver lining. Seeing oil stumble shows us that it’s not invincible. As Ivan Vanko in Iron Man 2 says, “If you could make God bleed, people would cease to believe in Him. There will be blood in the water, the sharks will come. All I have to do is sit back and watch as the world consumes you.”
If you don’t remember the film, Iron Man (a character partially modeled after Elon Musk) is at the top of the world and the top of his game, giving global leaders security with his unique Iron Man suit. He seemed invincible until someone with his father’s arc reactor technology attacks him, only narrowly losing the fight. Once he didn’t seem invincible, a variety of enemies emerged, including business competitors and government officials who wanted to take him down when he seemed weak.
A similar moment is happening with oil. It seemed like a god, but now it’s a god that failed. Its blood is in the water, and the sharks are definitely circling. It might sound too dramatic to use the imagery of sharks here, but imagine being a student $50,000 in debt with no job prospects. The fear is quite real for some.
Don’t assume that oil is some Goliath that can’t be beat. All it took was a rock in just the right place (COVID-19) to bring him down.