Gas Prices: How Demand for Crude Oil Affects Offshore Workers

Nothing is certain except death and taxes – and changing gas prices? Benjamin Franklin may not have mentioned gasoline or crude oil back in 1789, which is when this famous (and still valid) saying got its origins, but it certainly rings true today.

In the summer of 2022, average gas prices in the United States reached an all-time high of more than $5 per gallon. In some areas, those numbers peaked at nearly $8 per gallon, like in Los Angeles, California.

Why have gas prices increased? Some blame it on the price of crude oil, but it can be difficult to show a direct – and immediate – connection between crude oil and gasoline price changes here in the United States. The truth of the matter is that there are numerous factors at play. Supply and demand may be the most prominent, but this is also influenced significantly by national and global issues like the COVID-19 pandemic, Russia’s invasion of Ukraine, U.S. foreign policy, population growth, and even seasonal changes.

A CBS News article discussed the discrepancy between crude oil fluctuations and the changes customers actually see at their local gas stations. There is a delay, and this happens in two ways. The first scenario occurs when the price of crude oil increases, in which case a gas station may wait to hike up prices. This is meant to avoid frightening customers away. The second scenario involves decreases in crude oil prices. When oil prices drop and gas stations gradually lower the cost per gallon of gasoline, they have the opportunity to make a profit on the difference.

Even the $5 Trillion Oil & Gas Industry Is Affected by Supply & Demand

Global oil and gas exploration and production is a $5 trillion industry that employs more than 4 million people, according to market research by IBISWorld. This includes companies involved in the exploration, extraction, production, and refining of crude oil and natural gas, both offshore and on land.

Despite their size and influence, oil and gas companies are impacted by supply and demand. COVID-19 shutdowns proved this in a big way, as the price of a barrel of West Texas crude oil dropped below $0 in April 2020. Many oil and gas operations slowed or shut down altogether, and offshore and oilfield workers found themselves out of a job. According to the U.S. Department of Energy, more than 180,000 workers in oil and natural gas extraction lost their jobs in 2020.

Less than 2 years later, however, crude oil hit $100 a barrel for the first time since 2014. The industry faced a different problem: keeping up with demand. Oil and gas companies have since struggled to get trucks, supplies, and skilled workers to meet the demand for more crude oil. According to the Monthly Crude Oil and Natural Gas Production report from the U.S. Energy Information Administration (EIA), crude oil production in the United States has still not reached pre-pandemic levels.

How Fluctuating Gas Prices Affect Offshore & Oilfield Workers

Fluctuating gas prices impact Americans in many ways. We’ve reached a day and age where filling up at the gas station costs $75 to $100 or even more, depending on the size of your tank. But oil prices affect more than just the price of gas at your local Chevron. They affect the cost of transportation, heating, and manufacturing, which can, in turn, impact the prices of many different goods and services, as producers try to pass increased production costs to consumers. In this way, crude oil prices can contribute to inflation on a national level.

Then, there are the people who work in the industries most affected by crude oil price fluctuations. Their livelihoods and even their safety may be jeopardized by sudden changes in crude oil and gas prices.

Offshore workers and those who work in the Permian Basin, Eagle Ford Shale, Barnett Shale, and other top-producing U.S. oilfields may experience the direct and dramatic effects of crude oil supply and demand. Pandemic shutdowns aside, oil and gas companies traditionally have not decreased or ceased operations when crude oil prices have dropped. They continued to produce, anticipating the inevitable market uptick that would follow. This led to situations where companies would cut corners to try to keep costs low when oil prices were low, only to jeopardize the safety of their workers.

Oilfield operations are complex. They involve heavy machinery, immense platforms, and equipment and piping that extracts and transports highly volatile substances that could send an entire rig or facility up in flames in an instant. Offshore, the risks are even higher. Surrounded by water and at the mercy of heavy weather and storms, help is not always immediate or accessible at all.

There is no room for negligence, but the pressure to keep up production and profits in a volatile crude oil market has led some companies to make the wrong choices. Aging pipelines, failures to replace outdated or overworked equipment, long work shifts, inadequate safety training, delayed turnarounds, and countless other factors can lead to catastrophic incidents that endanger offshore crews and oilfield workers’ lives.

This is an industry already known for its blatant disregard for environmental safety and the well-being of workers. Take the Deepwater Horizon explosion and oil spill of 2010, the BP Texas City explosion of 2005, or the 2013 William Olefins explosion in Geismar, Texas. These incidents and many others like them have claimed countless workers’ lives and threatened the environment, local businesses, and residents by contaminating oceans, lakes, groundwater, soil, and the air we breathe.

Imagine what will happen if the demand for oil keeps increasing, if the price of gas continues to rise, and oil and gas companies continue to struggle to keep up.

Helping America’s Workers Since 2004

What do the Deepwater Horizon, BP Texas City, and Geismar explosions have in common? All were caused by negligence, and all resulted in successful lawsuits filed by our team at Arnold & Itkin against at-fault parties. Our attorneys have been fighting for oilfield, offshore, and industrial workers since 2004. We have represented families who have lost loved ones and workers who have suffered life-changing injuries in oil rig explosions, well blowouts, plant and refinery accidents, and a host of other incidents directly linked to companies that cared more about turning a profit than protecting their workers.

We have won more than $15 billion in verdicts and settlements for our clients, and we will continue to fight for what’s right. No matter what. To learn more about our firm and the ways we can help you, call (888) 493-1629.