The coronavirus pandemic has been a wild ride for the oil industry as it struggles to grapple with cratering demand for its main product. The biggest hits have been to small firms and middle-tier oil companies, but Big Oil is feeling the impacts, too.
In an email to staff on Monday that was also published on LinkedIn, BP CEO Bernard Looney announced the company would be laying off 10,000 workers. He called it part of some “tough decisions” but that “we must do the right thing for bp and this is that right thing.” (Yes, it’s technically lowercase “bp” because brands gonna brand.)
While Looney said the company will offer “substantial severance packages,” including job and job-seeking training, a laptop, and a vague hand-wave of an alumni network, the layoffs are a clear sign Big Oil is in big trouble. As a reminder, oil prices briefly went negative a little more than a month ago, and companies were spending a fortune stashing oil at sea because nobody wanted it amid the biggest demand drop ever. Shell’s leadership kicked off May by warning it expected an “L-shaped recovery” with demand never recovering for its product.
It’s against this backdrop that BP is deciding to lay people off in an effort to cut $2.5 billion (£1.96 billion) in operating costs in 2021. Looney said it would mostly be office workers, though how that actually shakes out remains to be seen. What they’ll be receiving training for is also unclear, though if it’s a future in the oil business, that isn’t it.
“I really believe we are building something special,” Looney wrote. “We are building a company that can help the world through the energy transition and help improve people’s lives.”
So to recap: BP is firing nearly 15 per cent of its workforce to build something special. That something special is a transition away from fossil fuels, the thing the company currently specialises in. It won’t be using this opportunity to train any of its frontline employees working on the actual extraction side to work on said transition. Oh, and its plan to get to net zero emissions by 2050 is hot garbage.
The tides are absolutely turning against BP and other oil companies big and small. Even before coronavirus shocked the system, they were turning smaller profits, and popular opinion was turning against an economy run on fossil fuels due largely to the youth climate movement. BP shaving billions off its operating costs and firing workers is the latest sign of turmoil – and that no matter how hard Trump administration tries to make oil a centrepiece of the recovery, the economic and political odds are not in its favour.
That 10,000 people are losing their jobs at one company amid the long-term decline of the oil industry should be a wakeup call to politicians everywhere that they need a plan for industry workers and fast. Even if BP largely keeps oilfield jobs out of its layoff plans now, the long-term viability of those jobs is nil given the stakes of a habitable planet. While it’s nice BP is going to offer worker training or whatever, workers need a real, guaranteed safety net. The sooner it’s put in place, the less needless suffering Big Oil’s collapse will cause – and the faster the world can transition to a 21st-century economy. That’s the actual right thing to do, not just for BP but for everyone.
Featured image: Getty