Global Layoffs

have been slipping over the past half year from a surplus in product across the world. Prices at their peak were lingering around $100 a barrel, which saw the industry grow in leaps and bounds with new jobs being offered often. Since its peak price in 2012, price per barrel has fallen to half its value, prompting oil and other commodities companies to implement cost cutting measures, one of which being layoffs.

Tensions are high for those employed by oil companies as the industry has seen over 100,000 jobs lost worldwide. Confidence has taken a further hit as the oversupply of engineers are being met with no job openings. Citigroup inc. has predicted that despite the price per barrel making its way over $50 a few weeks ago, it may drop to the $20 range around April. The surplus of crude has continued to rise as producers are not cutting output any time soon.

Big oil companies such as BP Group and Woodside Petroleum have announced that they have measures in place to tighten costs further if the market does not rebound to their liking. these two firms have been operating out of Australia, who with the current industry climate have taken a big economic hit. $70 billion has been poured into AUstralia to increase its natural gas export, an expense that is now seeing its beneficiary projects delayed, or cancelled. In Brazil, and Mexico the economic climate has been taking a hit as well. With no quick recovery predicted, many international schools are closing along with a reduction to government royalties.

Petroleos Mexicanos has a workforce of 153,00 employees has vowed to take care of their own during these tough times. Reductions to purchases and contracts have been able to save the company between $2 and $3 billion, but 8,000 workers were still laid off.

North Sea job oil production has also felt the same woes as the rest of the world. The region offers jobs to those who live in Aberdeen, Scotland, Stavanger, and Norway. So far, 11,500 jobs have been lost with another 30,000 looming below the axe with the reduction of value to the region being cut by $3.6 billion.

Gas Prices to Hit All Time High?

Back in 2010, John Hofmeister, former President of Shell Oil, predicted gas prizes would soar to $5 a gallon in 2012 due to rising crude oil prices. However, Hofmeister missed his mark as they only reached $4 a gallon. Now today, Hofmeister is preaching that people should look out for that $5 a gallon scenario again.

Today, gas is $2.14, it’s lowest price since May of 2009. Hofmeister wants drivers not to get too comfortable with this price as he believes things will be very different later this year. With crude oil hitting below $46.50 a barrel today, Hofmeister believes crude oil will rebound back to its $80-90 price range and with that rebound, people will again be paying at the pumps. While the price of oil continues to decline, we did however see some resistance. Last week, the price of oil had its first rise in almost two months. This could be just the first of many signs to come.

Hofmeister believes that if we do not see $5 a gallon this year or early next, that it will at least happen sometime this decade. If demand growth continue to climb towards 100 million barrels a day and industry production falls short, we can very well see $5 a gallon. To help instill confidence in this theory, Ryan Lance, CEO of ConocoPhillips, also believes oil prices can rebound faster than anticipated, much like they did in 2009.

While Hofmeister is a credible person and we have every reason to believe him, other credible sources in the industry have different views on the future of gasoline prices. The US Energy Information Administration predicts an average gasoline price of $2.33 this year and $2.72 in 2016. Obviously this a very different prediction compared to Hofmeister. While Hofmeister was wrong in 2010, he still was not far off. Prices did in fact rise to $4, so do we take what he has to say seriously this time around?

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