Why you should care
Nearly 100,000 new jobs for mining “support activities” have been created under the U.S. president.
Two months after taking office, President Donald Trump stood before an audience at a rally in Louisville, Kentucky, and reiterated one of his campaign promises. “We are going to put our coal miners back to work,” he declared. “They have not been treated well, but they’re gonna be treated well now.”
At the time, Trump was hot off repealing environmental regulations. But the boom he promised never seemed to become reality: Coal production went up slightly in 2017, but coal consumption fell. Still, miners across the United States hoped that their industry and its once-secure, well-paying jobs would return. And they are … but in a new way. The Trump administration has presided over roughly 6,300 new mining jobs, but Bureau of Labor Statistics data shows that:
Jobs in support activities for mining have risen 37 percent since January 2017.
That’s the largest single turnaround percentage rate of any substantial sector in the U.S. economy. And it adds up to 98,200 additional jobs as of September. But what are “support activities”? They’re roles in the mining or energy industry, such as taking core samples and making geological observations at prospective sites, that are performed on a contract or fee basis. It’s noteworthy that jobs classified as “mining” and “extraction” alone are not growing as quickly as mining support jobs. As the number of rigs and amount of activity increase, individual companies have a limited number of employees but bring on additional drill crews — and it’s become typical to hire a service company, aka contractor, says Dean Foreman, chief economist for the American Petroleum Institute (API).
A key factor driving this increase in support jobs is the oil and gas sector, which contributes to 79 percent of total mining support employment, according to the National Mining Association. When oil production increases, contract or support workers tend to be hired first to meet growing demand. Support staff handle a variety of responsibilities like drilling, completing wells and driving trucks.
And those workers — even up to scientists and vice presidents — are used to the whims of oil prices, as companies prefer to hire on an hourly basis so that they can let employees go when prices drop, notes Mehdi Ostdhassan, an assistant professor in the petroleum engineering department at the University of North Dakota. “Everyone in this industry knows that you can go to work and you basically might not have a job the day that you arrive,” he says. But when prices stabilize, companies hire again. “It’s a vicious cycle, everyone knows that, and everyone in the oil and gas industry is pretty used to it,” says Ostdhassan.
Kudos on the economy, but on the trade side, these frictions are having real impact.
Dean Foreman, chief economist, American Petroleum Institute
Oil companies went through what Foreman calls a cycle of “draconian cuts and belt-tightening” from a price downturn in oil that lasted from late 2014 into the third quarter of 2016. Though companies are growing, they remain cautious when adding jobs. Recent strong growth, along with technology and process breakthroughs in the industry — such as real-time optimization for perforating wells — has led to increased productivity, Foreman says. The U.S. reached a record of 11 million barrels of crude oil production per day in September, API reports. Foreman points to the “energy renaissance” the U.S. has experienced, adding, “You’ve got the pulse of the skilled and unskilled labor that’s coming to support that.”
Still, increased demand for oil and natural gas products comes with drawbacks. Leading global climate experts caution that the world has only 12 years to keep global warming at a limit of 1.5 degrees Celsius; otherwise, extreme environmental degradation will result. The use of coal in particular needs to be reduced to nearly zero to meet that limit, and countries need to transition toward solar energy, wind energy and electricity storage technologies, according to a recent report from the United Nations Intergovernmental Panel on Climate Change.
So how much credit can Trump take for all this?
Foreman says Trump’s major tax cuts are boosting growth, but his 25 percent tariff on steel and 10 percent tariff on aluminum are raising industry costs. The trade dispute with China is also causing concern, and the U.S. recently observed the biggest drop on record — 1.3 million barrels per day — of petroleum exports. In June, China was purchasing a billion dollars’ worth of U.S. products, but by August, its purchases dropped to zero, Foreman says. Brazil, the Netherlands and Japan purchases are also falling. Trump’s renegotiated trade deal with Canada and Mexico is especially important to the industry’s supply chain, and it still needs to clear Congress.
“Kudos on the economy,” Foreman says, “but on the trade side, these frictions are having real impact.”
He highlights data from the U.S. Energy Information Administration that projects continued growth into September 2019, but at a slower rate of 6.7 percent, rather than the 16.5 percent seen this September. Whatever the predictions, mining contractors have learned to expect the unexpected.