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: Marketplace Morning Report
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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
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

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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