Most Americans are at least dimly aware that the population of the country is steadily aging on the whole, with the massive baby boom generation reaching its elder years. And most people understand that the change could have dramatic impacts on American politics, economics and even culture, from rising Medicare costs to even stronger voting strength for the elderly.
One aspect of the upcoming generational shift that is often overlooked by people who are not directly affected, however, is the impact that this aging population will have on skill- and knowledge-based industries around the country. Chief among these industries is the energy sector, which relies heavily on a variety of very specific science and engineering professionals.
Big energy going grey
According to the Bureau of Labor Statistics, the oil and gas extraction industry employs around 193,000 people across the U.S. The energy sector as a whole tops that by a wide margin, with utilities alone employing more than 560,000 people, without counting competitive electricity providers, energy system manufacturers or the more local positions created in the burgeoning green energy economy.
However, many of these hundreds-of-thousands of employees are nearing the ends of their careers. Analysis from information and research firm IHS shows the average age of the oil and gas industry's professional workers rose from 43 years old at the start of the new millennium to 50 toward the middle of the decade. By this year, that peak was expected to move as high as 60 years old.
Retirements without replacements
As the industry average continues to near retirement age, most companies are bracing to see around half of their professional staff leave within the next decade, what many have dubbed "the Big Crew Change."
A report from Schlumberger Business Consulting, the eighth annual "Oil & Gas HR Benchmark Survey," found that the oil and gas industries will be required to replace more than 22,000 top geoscientists and petroleum engineers by 2015. The report is actually significantly more positive than recent estimates about the potential for universities to provide sufficient graduates to fill these open positions, but it does note that the sector will ultimately see a loss of experience, if not a decline in overall numbers. In particular, the 2010 SBC report projects a limited supply of graduates from "quality institutions."
But the Big Crew Change is certainly not restricted to oil and gas exploration companies. Manufacturers like Ford and Caterpillar are facing shortages of machinists and other specialists, but the BLS points out that the energy industry as a whole is dealing with an aging workforce. In 2008, about 37 percent of the electric power generation, transmission and distribution industries were between 45 and 54 years old, compared to 23.4 percent for the national workforce.
Industry growing as shift looms
Despite the ongoing concerns with replacing the huge number of retiring workers, the energy sector has already seen staggering growth in the past few years. NewGeography reports an analysis from Praxis Strategy Group shows that jobs in the oil and gas industries along with mining and quarrying grew as much as 58.5 percent from 2006 to 2011. Even the healthcare and education sectors paled in comparison, achieving a very respectable 11 to 12 percent growth.
Utilities also added their fair share of positions, growing 3.4 percent. And neither of these numbers even take into account the surging renewable energy sectors across many parts of the U.S.
These positions include some of the highest-paying jobs in the country as well. The BLS Occupational Outlook Handbook notes that petroleum engineers earned a median of more than $114,000 in 2010, ranking as the highest-paying engineering position in the country. Mining and geological engineers likewise ranked highly with a median salary of nearly $83,000. Other key engineering and technician roles ranged from the mid-$40,000 to the high $60,000 range, but NewGeography notes the utilities sector actually reported even higher average annual earnings than the oil and gas sector.
Consequences as well as opportunities
Despite the potential for younger workers to establish themselves in growing industries, though, there are serious concerns about the impact worker shortages could have on the economy. A substantial majority of the surveyed national (70 percent) and international (60 percent) oil companies reported delays in some projects due to staffing problems.
Oil and Gas Journal also notes that the majority of new geosciences and petroleum engineering graduates are coming from Russia and Asia, particularly China. As more trained professionals come from abroad, many companies will need to adopt a more international hiring and recruiting strategy. Particularly as the oil and gas industries come to rely on more technically complex extraction techniques like hydraulic fracturing and deep sea drilling, many companies will need to proactively address their approach to hiring to maintain consistent growth.