Find Out How The Slump In Oil Prices Is Affecting The U.S. Economy

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The slump in global crude oil prices has adversely impacted the industry and the U.S. economy. While several leading oil and gas companies have adopted cost-cutting measures, a majority of them have laid off employees over the past year. The economic growth in the U.S has seen a decline in the second quarter this year. Read this article to learn more about the impact of the slump in oil prices.

Swift Says Oilfield Layoffs Have Touched 171,100 This Year

With the profit margins dwindling due to the decrease in oil prices, many oil and gas companies have been forced to adopt cost-cutting measures and increase profitability. Many of these companies have frozen recruitment, withheld bonuses and laid off employees in an attempt to stay afloat in the grim scenario.

The oilfield services industry has seen thousands of layoffs over the past year. According to new estimates by Swift Worldwide Resources, a global oil and gas recruitment agency, the number has touched 1,76,100 this year. Agencies that provide staffing services in Houston, Texas, are seeing a drastic decline in business. This number is likely to increase this year. As a result of the loss of jobs, there is reduced consumer spending. This in turn, adversely impacts the U.S. economy.

Collin Eaton said in a recent article:

“Houston-based oil industry recruiter Swift Worldwide Resources estimates worldwide oil field layoffs have reached 176,100 so far. That’s up from its previous estimate of 150,000 in mid-June. The figure rose by 10,000 in June and by more than 14,500 last month and it expects more throughout this year.”

Decline In Economic Growth Due To The Slump In Oil And Gas Prices

The drastic reduction in global crude oil prices has halted further oil and gas exploration and mining activity. Companies want to play it safe by increasing the production of existing oil wells, instead of searching for more oil and gas or drilling new ones. This in turn has affected the growth of the economy by 0.7 percent in the second quarter this year. The situation is likely to worsen in the months to come.

Jonathan Fahey said in a recent article:

“David Kelly, chief global strategist at J.P. Morgan Asset Management, said this week that a $29 billion decline in oil exploration and mining activity in the U.S. cut economic growth by 0.7 percent in the second quarter, a sizable chunk for an economy that grew 2.3 percent.”

The slump in crude oil prices is having a negative impact on the recruitment plans of oil and gas companies and delaying the growth of the economy. Read this article to learn more about this topic.