Job openings are an odd problem to have at a time when millions of Americans are desperately seeking work, but the problem isn't bodies — it's skill.The technical jobs require training and experience, and with so many construction and drilling projects coming on line at the same time, companies are cautioning that there just aren't enough workers to go around. The demand is driving up wages as well.
So how exactly did the industry find itself with such a massive labor gap?
It's the product of one drilling boom and one drilling bust.
Currently, the industry is taking off, snapping up all the laborers it can to build up and maintain infrastructure, from rigs to export terminals. It would seem that with high unemployment coupled with the gas boom would be a simple supply-demand equation. In the Gulf Coast, for example, the construction of natural-gas liquefaction terminals is expected to created thousands of construction and technical jobs. (That's helped Gulf states defy the national unemployment picture — Louisiana's unemployment rate of 4.5 percent ranks 10th in the nation.)
But new workers can't replace experience, and that's where the 1980s bust is coming back to haunt Gulf Coast drillers.
When oil prices dropped from $35 a barrel to as low as $10, companies responded with hiring freezes and layoffs that stretched through the end of the decade. An industry that had a peak of 860,000 jobs in 1982, according to the Bureau of Labor Statistics, shed more than a half-million of them by 2000.
As the industry grew less attractive, colleges shed training programs, and fewer students chose engineering or petrochemical majors, meaning a slower trickle of new entries.
And so, a generation gap emerged. A new analysis from recruiting firm Russell Reynolds and Associates gathered input from 30 of the top oil, gas, and power companies and found that 61 percent of executives in those companies are older than 52 and eyeing retirement. Twenty-seven percent are between 44 and 52, while 13 percent are younger than 44.
In short, there are more executives ready to retire than there are those to take their places. And the ones who are stepping in don't have as much experience.
"What we hear is that the historical base of talent has been diminished," said Stephen Morse, who heads the Russell Reynolds' global energy and natural-resources practice. "And you have this massive disruption of technology, which is making people less qualified for senior roles."
Ahead of the current gas boom, the American Petroleum Institute was even warning that the employment issues could put a damper on the sector's "optimistic future prospects."
"It is human resources that offer a potentially more binding threat to industry expansion than physical resources or their characteristics," the group wrote in a 2005 industry survey.