COVID-19

Exxon’s job cuts are another sign that the oil industry is still in a slump

Justin Ho Oct 30, 2020
Heard on:
HTML EMBED:
COPY
Bruce Bennett/Getty Images
COVID-19

Exxon’s job cuts are another sign that the oil industry is still in a slump

Justin Ho Oct 30, 2020
Heard on:
Bruce Bennett/Getty Images
HTML EMBED:
COPY

ExxonMobil has announced it will cut roughly 1,900 jobs in the U.S., in what the company calls an ongoing reorganization. The cuts are part of what may wind up being a 15% workforce reduction Exxon said it anticipates.

The company reported a third-quarter loss of $680 million on Friday morning.

Many big oil companies are finding it hard to do business, with crude prices hovering at around $40 a barrel. Just to get oil prices up to where they are now, oil producers had to cut back, said Sarah Ladislaw at the Center for Strategic and International Studies.

“It was really the entire industry putting the brakes on for a period of time,” Ladislaw said.

Demand for oil has come back a bit, but it’s still low because of the pandemic. People aren’t driving as much as they used to — or flying. Jet fuel consumption has been nearly cut in half.

Ladislaw said demand is likely to stay low for a while.

“Most forecasts think we won’t get back to where we were in 2019 — maybe at the end of 2021 or even 2022,” she said.

As a result, oil company layoffs will likely continue, said energy economist Philip Verleger. Some companies, he said, will have trouble borrowing money.

“Bankruptcy tolls just keep going up as companies can’t borrow and lose cash flow,” Verleger said.

The Federal Reserve Bank of Kansas City reports that, in order to be profitable, oil companies say they need crude prices to rise to roughly $50 a barrel.

COVID-19 Economy FAQs

What do vaccines mean for economic recovery?

COVID-19 is not going anywhere anytime soon, according to expert witnesses who testified at a recent hearing held by the Joint Economic Committee. Put simply, we can’t eradicate the virus because it infects other species, and there will also be folks who choose not to get the vaccine or don’t mount an immune response, according to Dr. Céline Gounder at NYU School of Medicine & Bellevue Hospital. “That means we can’t only rely on vaccination,” Gounder said. She said the four phases of recovering from the pandemic are ending the emergency, relaxing mitigation measures, getting to herd immunity and having long-term control.

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

Read More

Collapse

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.