Today’s Key Takeaways: Job listings down 9% this year – still 50% higher than pre-pandemic levels. Oil and gas pipeline spend of $369B led by US shale plays. Qatar names ConocoPhillips as partner in LNG expansion. Alaska mining jobs on the rise. Biden sacrifices national security with SPR drawdown.
News of the Day:
The Great Resignation is cooling off
Emily Peck, Axios, October 31, 2022
The Great Resignation is cooling off. Demand for workers in certain pandemic-hot sectors — especially tech — is down sharply from last year, per job site Indeed’s latest numbers.
Why it matters: Big Tech went on a hiring binge over the past year, as Axios’ Ina Fried reports. Now the diet begins. The industry is in “belt-tightening” mode — with hiring freezes and even layoffs on the menu, she writes.
- The industry’s woes could be an early indicator of what’s to come in the broader labor market, which has so far stayed strong despite other worrying signs in the economy.
Fewer job openings mean less demand for workers. It’s also an indicator that folks won’t be able to job-hop their way to the kind of sky-high pay increases certain professionals scored in 2021.
- Back then, if you played it right, you could basically name your price.
Zoom out: Lower demand means slowing wage growth — which, as we say on repeat here at Markets, is what the Federal Reserve wants in its fight against inflation.
- That’s already happening. The Employment Cost Index, out Friday, showed wage growth falling in the third quarter — though still relatively high.
- Fewer workers are quitting their jobs for better prospects, ZipRecruiter’s chief economist Julia Pollak said in a note, with a chart titled, “The Great Resignation is coming to an end.”
- Not only are there fewer jobs on offer, but workers are nervous. “Amid increased fears of a possible recession, employees are prioritizing job security over pay,” she writes.
Details: The five occupations that saw the biggest declines in demand were in areas where remote work really took off, including software development, marketing, and math-related roles (think data science or analysts).
- There was a 27% decline in human resource job listings. “If you’re looking to hire fewer HR people, that probably means you’re looking to hire fewer people in general,” says Nick Bunker, Indeed’s economic research director for North America.
- Bunker says another area where demand for workers is falling is in warehousing.
Yes, but: While overall job listings are down 9% on Indeed this year, they’re still 50% higher than pre-pandemic levels.
- “There’s still a relative bounty of job openings — it’s just not as bountiful,” Bunker says.
Oil:
Onshore Oil And Gas Pipeline Spend To Reach $369B By 2028
Bojan Lepic, Rigzone, October 31, 2022
Initial findings from Westwood’s upcoming onshore pipeline market forecast indicate that the outlook for oil and gas-related pipelines has improved in 2021, driven by higher commodity prices and a recognition from numerous markets that diversification in supply is required. Overall, almost 310,000km of new pipelines are forecast to be installed between 2022 and 2028, translating into a spend of $369 billion.
Westwood said that the expenditure and number of additional kilometers installed were expected to be led by North America, with pipelines to increase gas offtake capacity in the US’ major shale plays leading demand. The cost per kilometer installed in the region is forecast to be among the highest globally with labor costs and significant legal challenges and permitting issues pushing up costs strongly in the region. Asia is also expected to see major investment over the forecast, led by China and India
Gas:
UPDATE 2-QatarEnergy names ConocoPhillips partner for LNG expansion project
Andrew Mills, Yahoo! Finance, October 30, 2022
Qatar Energy’s chief executive on Sunday named ConocoPhillips as the third and final partner on the Gulf Arab state’s North Field South expansion, part of the world’s largest liquefied natural gas (LNG) project.
ConocoPhillips will have a 6.25% interest in the project, Saad al-Kaabi told a news conference.
State-owned Qatar Energy had already announced Shell and Total Energies as partners in the North Field South expansion and Kaabi said each would hold a 9.375% stake.
The North Field is part of the world’s biggest gas field that Qatar shares with Iran, which calls its share South Pars.
Qatar Energy earlier this year signed deals for North Field East, the first and larger phase of the two-phase North Field expansion plan, which includes six LNG trains that will ramp up Qatar’s liquefaction capacity to 126 million tonnes per year by 2027 from 77 million tonnes.
LNG supplies and capacity have taken on special importance since Russia’s invasion of Ukraine in February has led to cuts in Moscow’s gas supplies.
Kaabi said discussions continued with several Asian buyers as “value-added partners” that “will have a small equity participation” on the North Field expansion, but that the Western international partners were all announced.
Several supply agreements were being discussed in relation to the North Field expansion, he said, adding that there would be announcements in due course.
“It’s difficult to give a timeline on when these will be ready,” he said.
Kaabi also said that Golden Pass, a LNG facility in Texas jointly owned by Qatar Energy and ExxonMobil, would start exporting gas by the fourth quarter of 2024.
ConocoPhillips CEO Ryan Lance told the news conference in Doha that curbs to fuel exports, which U.S. President Joe Biden’s administration is considering to lower consumer prices, would be a bad in the long-term for the United States.
“If you start to restrict access going into global markets, you restrict the supply that’s out there, the price will go up,” Lance said. “And since they trade on a global market, the U.S. price would go up as well.” (Reporting by Andrew Mills; Writing by Ghaida Ghantous; editing by John Stonestreet and Tomasz Janowski)
Mining:
More Alaska Jobs in Weed and Mining
High North News, October 31, 2022
Alaska is slowly regaining the thousands of jobs lost during the pandemic, but it may take a few more years for the state to return to 2019 levels of employment, Alaska Public Media reports. An October report from the state labor department said Alaska ranked 47th in the U.S. for job recovery from 2019 through the first half of 2022.
Paul Martz is an economist with the state of Alaska. He looked at 10-year industry projections for the state in the October Trends newsletter. He says the oil and gas industry was already losing jobs in the years leading up to the pandemic.
But the mining and weed business is on the rise.
“Most of the growth we [project] for mining in Alaska is expansion of existing mines. There is a few specific example, but almost all of the operating mines in the state are undergoing or have recently undergone exploration and expansion projects into the surrounding areas”, Martz said.
The weed industry has seen robust growth, even through 2021.
“The pandemic only really slowed it down slightly. If there is a saturation point for this industry in the market, we do not see any evidence of it now. And it is a very new industry, so the actual number of jobs is not really all that much, Martz said in the interview.
Politics:
Biden Sacrifices National Security For Midterm Votes With SPR Drawdown
Dan Eberhart, Forbes, October 27, 2022
Dan Eberhart is CEO of Canary, LLC.
The Biden administration is again looking to the Strategic Petroleum Reserve (SPR) to tame rising oil prices. Unfortunately, tapping further into America’s emergency stockpile won’t work. In fact, drawing down the SPR will weaken America’s energy security and exacerbate an energy crisis already threatening the global economy.
It’s easy to see the political motivation behind President Joe Biden’s plan. Retail gasoline prices are on the rise again and threaten Democrats’ chances in the Nov. 8 midterm elections.
Clearly, things are not great with the economy. Domestic oil production growth from shale has stalled, and the OPEC-plus cartel certainly didn’t do the White House any favors with its recent decision to cut supply by 2 million barrels a day.
But Biden’s use of the SPR as a market management tool, rather than the emergency reserve it was designed as, is reckless in today’s supply-driven energy crisis.
Biden has been selling SPR oil at unprecedented rates since May to handle the aftermath of Russia’s invasion of Ukraine. The latest sale of 15 million barrels was in addition to the record 180-million-barrel sale authorized last spring. Despite this, the administration is already eyeing new sales starting in January.
The SPR under Biden has been drained to about 405 million barrels – the lowest volume since 1984. And the White House has made it clear that it is comfortable taking the SPR – which can hold up to 714 million barrels – much lower.
The administration thinks it has a plan to refill the SPR and spur more U.S. oil production by guaranteeing a “fixed contract” with a buyback price of around $70 a barrel for domestic oil companies.
“Refining and refilling the reserve at $70 a barrel is a good price for companies, and it’s a good price for taxpayers,” Biden said.
Biden’s comments demonstrate a total lack of understanding about how the oil markets and America’s oil industry work.
The buyback plan will have a limited impact on producers’ investment decisions, driven mainly by investor demands for cash returns.
Moreover, the oil futures market’s current structure is sending producers signals that locking into a fixed contract of $70 in the future is a bad idea – even with demand concerns about a coming recession.
Indeed, the “forward curve” for U.S. benchmark crude West Texas Intermediate (WTI) does not signal a drop to $70 until mid-2024. WTI now trades around $85 a barrel.
The oil market structure is in “backwardation,” a condition where prices further out in the future are lower than the price for immediate delivery. Backwardation indicates a very tight supply market, which dissuades producers from hedging for fear of leaving money on the table by locking into below-market rates.
Biden thinks he is setting a floor for U.S. producers as they consider new investments, but in reality, his plan adds risk to the global oil market.
Why?
Because it further antagonizes Saudi Arabia and the OPEC-plus group, which holds the spare production capacity required to manage supply and demand within the oil market.
Before this latest sale, OPEC-plus was already fed up with SPR releases and other market interventions by the United States and European Union, including a G7 “price cap” on Russian oil sales.
The cartel restored ample spare capacity of around 3 million barrels a day after it decided to make the big supply cut earlier this month. But having that spare capacity means nothing unless the Saudi-led group is willing to use it.
OPEC-plus will now factor further SPR releases into its supply management decisions. With U.S.-Saudi relations in the throes of a crisis, you can bet that the threshold for OPEC-plus to use that spare capacity has increased.
That’s troubling because the EU bans on Russian crude and refined product imports set to take effect in December and February, respectively, will result in Russian supply losses of up to 2 million barrels a day. That is a real supply disruption – the sort of emergency the SPR was designed to address.
But let’s not pretend Russia is the only supply risk on the horizon.
A closer look at the oil-producing countries in the OPEC-plus group shows considerable exposure to geopolitical risks: Libya, Iraq, Iran, and Nigeria, as well as the potential for issues to arise in Russia’s Caspian neighbor Kazakhstan.
Closer to home, the Atlantic hurricane season continues to pose a threat through November. Hurricane Ian may have missed the Gulf Coast oil production hub, but it served as a reminder of how much damage such a storm could inflict.
The SPR is the largest strategic stockpile in the world, so its shrinking volume impacts global oil prices. It’s no surprise that Biden’s latest announcement caused oil prices to rise, as traders see fewer emergency reserves as the market heads toward more Russian trouble with the approach of the EU import bans.
The White House is injecting a lot of risk for just a few votes in the midterm elections.
Biden would be better off making peace with America’s oil producers and easing his administration’s climate policies that seek to destroy the industry. Even former President Barack Obama boasted about the benefit of U.S. energy production, but Biden can’t seem to get there.
The Biden administration’s moves jeopardize our national security. The depletion of our emergency oil reserves can only last until the stockpiles are exhausted, while replenishing them will take years.
Who knows what new threats may menace energy markets then.