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The Return of Jobs to the US Energy Sector
June 10, 2020

The U.S energy sector has lost 1.3 million jobs since the start of the pandemic. The pandemic, coupled with the inability for OPEC+ to agree on supply cuts earlier on, attributed to a significant over supplied market where demand for Oil had dropped significantly. Overall, oil demand at the peak of lockdowns dropped 30%, resulting in the price of Oil crashing to levels where it was no longer profitable for Oil producers to produce, which has played a major factor in the job losses.

How do these jobs come back? The answer to that question relies on when the relationship of oil demand to oil overall supply will return to the same or near the same levels of pre-lock down.

The following sections will quickly examine the demand, production supply, inventory levels of Oil, both prior to the lockdown and current, to make an estimate on when we will return to Oil price levels that will require the lost jobs to return.

Oil Demand – Consumption Pre-Lockdown

In order to understand the return of the lost demand for Oil, let’s take a look at the breakdown of Oil consumption pre-lockdown. In the United States, 20.46 million barrels are consumed a day of Oil pre lockdown. The world consumed 101 millions barrels a day pre-lockdown.

The distribution of oil demand is as follows:

  • Road: 50.11%
  • Petrochemicals: 14.38%
  • Residential/Commercial/Ags: 9.09%
  • Aviation: 7.82%
  • Marine bunkers: 3.38%
  • Electricity generation: 2.33%
  • Rail and domestic waterways: 1.69%
  • Other industry: 11.21%

Who consumes the most petroleum products?

  • United States: 20.3%
  • China: 13.2%
  • India: 4.6%
  • Japan: 4.1%
  • Russia: 3.7%

Current consumption

The largest loss of demand came from Road transportation, where if you look at the latest EIA report, we are currently down 20% from the same time last year or the equivalent of 2.05 million barrels a day. The second largest loss in demand comes from Aviation, specifically Jet Fuel where we are currently down 80% from the same time last year or the equivalent of 1.3 million barrels a day. The other losses in demand are negligible. This totals to 3.35 million barrels of demand loss day.

Oil Production – Supply Pre-Lockdown

The United States had increased daily production, surpassing Saudi Arabia, to nearly 13.1 million bbl/day. Below shows a table of the top 20 producing countries from earlier in the year, prior to the US surpassing 13 million BBL/Day.

United States12,833Kazakhstan 1,945
Saudi Arabia12,007Nigeria 1,793
Russia 10,880Mexico 1,748
Canada 4,575Norway 1,682
Iraq 4,480Qatar 1,530
United Arab Emirates4,033Angola1,352
China 3,923United Kingdom1,081
Brazil3,168Algeria 1,004
Iran 1,969Colombia884
3d illustration of barrels with oil

Oil production supply during lockdown

OPEC+ agreed to 9.7 million barrels per day cut, which started on May 1st. The United States have dropped to 11.2 million barrels per day (almost 2 million cut). The total supply cuts are near 20 millions bbl/day globally. OPEC+ are nearing discussions to extend these cuts beyond June.

Quickly looking at the numbers, it might seem that the US has not cut enough to address the demand drop of 3.35 million bbl/day, however it is important to note that this last week imports of Oil are down 1.8 million bbl/day from last year at the same time. If you look at the production cuts and import cuts together we are actually drawing from inventory, which explains the 2.1 million draw this week.

It is important to understand how much inventory we have built over the period of the pandemic, to determine how over supplied the US market is.


Below shows the increase in Crude Oil inventory, week by week since the start of lockdowns in the United States, compared to last year’s data during the same time period. The data below is from the EIA website.


Based on the 2020 EIA data compared to the 2019 EIA data above, the United States is roughly 50 million barrels over supplied (or 47 million if you factor in the Strategic Petroleum Reserve has 3 million more barrels than it did at the same time last year).

Estimate of return to recovery

As of the fifth week of May’s EIA report, we are consuming 3.35 million barrels a day less that pre-lock downs and we are producing almost 2 million barrels less a day and are importing 1.8 million per a day less. If demand does not move, we should be drawing from inventory about 0.5 million bbl/day if the imports and cuts remain constant. With the lock downs easing, air traffic slightly rising and people getting back to work, likely the demand loss of 3.35 million barrels/day will be reduced further. However, even if it does not, at the 0.5 million barrels/day draw, it would only take 94 days to have consumed the surplus and should see Oil prices recover to pre-covid pricing. This is of course assuming that Oil cuts remain until the pricing has recovered. Once the prices have recovered, there will be a need to start producing more gradually to avoid a spike in Oil prices, at this point many of the 1.3 million (maybe all) the jobs we can see returning towards the end of Q3, beginning of Q4.

We’re excited for the speedy recovery of the Energy sector. SkillStorm is ready to provide emerging technology talent to this sector or assist in re-skilling technology professionals in the latest in-demand technology, when the Energy businesses are ready and back in action.


An innovation and opportunity accelerator, SkillStorm is the surging force behind the transformation of today’s tech workforce.

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