Resources Reality

The Disastrous Academia-Industry Disconnect and the Perils of Trying to Pursue a Geology/Geophysics/ Geoscience Career in Canada

By: Frederick Humphries

06/06/2021

If you are a young person considering a career related to natural resource exploration and extraction, this blog aims to bring to your attention several issues that are of importance to you, which you are not likely to hear about anywhere else. The reality of working in the extractive industries is unlike any other and you need to be aware that most related technical/ scientific postsecondary programs (at least in Canada) generally do not include compulsory coursework in commodity economics/finance and geopolitics.  If you are seeking career advice from family and friends who have had lifelong careers in fields such as health care, fire/police/EMS, education, general civil service, utilities, banking, insurance, law, accounting etc., the volatility and employment practices typical of the extractive industries are likely not only outside their life experiences but also beyond their imaginations.  This means that most students and workers employed in other industries generally have little understanding of the nature of commodity prices and the implications for trying to earn a living. 

When I was younger, I naively thought of each industry like a conveyor belt with new graduates continuously getting on one end and retirees off the other.  Furthermore, I assumed that there was a demand in the economy for university programs of an applied nature, otherwise why would they be offered?  As you will see, these assumptions do not necessarily hold water and the university-industry disconnect blinded me to it.  Despite the media hype surrounding STEM careers in recent years, they are not always a slam dunk.  Now that I am unemployed once again, I decided to take the time to create this blog as my conversations with unemployed recent graduates over the past several years leads me to believe things have changed very little since I left school and I believe the status quo is ethically questionable to put it mildly.  Why no one else has written something similar long before now is beyond me.   

Although there is no guarantee that the future will resemble the past, history is the best guide we have to at least understand the range of possibilities for the future.  The following series of charts display historic commodity prices, indices, and ratios which collectively tell a story.  If your university experience is like mine was, you will never see any of them as a student.  This blog focuses on Canadian energy and mining; however, these industries in other countries, as well as industries such as fishing, forestry, and agriculture are also vulnerable to the same type of dynamics.  You only need the ability to read charts to understand the gist of what these charts are telling you so follow along and you’ll get the picture (more charts of interest can be found at these links: silver, iron, nickel, coal).

CRB Commodity Index – 26 Year Historical Chart (arithmetic average of commodity futures prices with monthly rebalancing for 19 commodities from 4 weighted groups: energy (39%), agriculture (41%), precious metals (7%), and base metals (13%)).

Crude Oil Prices (WTI or NYMEX, USD/bbl) – 50 Year Historical Chart, log scale, inflation-adjusted, recessions shaded in grey. Source: Macrotrends

Natural Gas Prices (USD/MMBtu) – 23 Year Historical Chart, log scale, inflation-adjusted, recessions shaded in grey. Source: Macrotrends

Copper Prices (USD/lb) – 60 Year Historical Chart, log scale, recessions shaded in grey. Source: Macrotrends

Gold Prices (USD/oz) – 50 Year Historical Chart, log scale, inflation adjusted, recessions shaded in grey. Source: Macrotrends

A ratio of a broad-based commodity index to the US stock market.

It is not my intention to go into the reasons behind the volatility shown in the charts, which may be the result of one or a combination of factors including (but not limited to): politics, geopolitics, conflicts/wars/revolutions/ terrorism, weather, new technology, environmental activism & regulation, globalization/deglobalization, population growth, currency swings, interest rates, monetary policy & inflation/deflation, resource depletion/new discoveries, pandemics, financial crises, infrastructure spending, and economic growth/contraction. The point is, when working in resource extraction, any number of things entirely beyond your control can impact your ability to earn a living for an extended period of time. 

Not unexpectedly, industry hiring (and firing) tends to follow commodity price trends and the downtrends can be long and painful (see chart below).  One could argue that the uptrends negate the downtrends but if that is the case, you have to ask yourself if you can make and save enough to get through the downturns, pay off your student debt, responsibly prepare for retirement (you likely won’t have a pension in industry), and if you really want to live this way.  If you happen to graduate near the bottom of these cycles, your chances of joining industry at the entry level are slim and by the time things are on the upswing, there will be new cohorts of fresh graduates for you to try and compete with.  For reasons mentioned above, employers in other industries will not be sympathetic to your plight. 

The early 1970s to early 1980s uptrend in commodity prices evident in the above charts, remembered as the halcyon days in resource circles, was particularly strong and coincided with the “Great Inflation” and the unprecedentedly large baby boomer generation entering the workforce en masse.  This demographic group, colloquially now known in the resource industries as the “Grey Wave” or the “Great Crew Change”, found opportunities galore and literally dwarfed all those that followed.  In the chart below you can see the precipitous drop in degrees granted after the mid-80s in the US, which had similar circumstances to Canada.   

During this era, some employers even reportedly hired people with unrelated degrees for technical positions and trained them in-house for lack of suitable candidates (can you imagine something like that happening today?).  The bubble burst in the early 80s with rising interest rates but most of those in oil & gas who survived the 1980s recessions went on to do very well both professionally and financially, far better than anyone in line behind them could have hoped for (outcomes for mining professionals were much more variable).  I can remember how surprised some of these people were when I told them circa 2005 that some years over the preceding decade, nearly entire graduating classes had been unable to find employment in their field (and the classes weren’t very large).  Apparently, they never noticed they had spent their entire careers to that point exclusively among their peers.

As far as I could tell, there was minimal hiring of graduates in the extractive industries from the mid-80s to mid-2000s and then again in the years following the financial crisis and since about 2015 to present.  When I started my first geoscience job in oil & gas around the turn of the century, I had never seen or heard of another industry with such a small proportion of younger workers.  It was as if nearly an entire generation was missing from the workplace, and yet, curiously, during my time at university not a word of this was ever mentioned.  Perhaps the profs weren’t even aware of the situation in industry, who knows?  The last thing you want is to be working in an industry where the average worker has several decades more experience than you do. Likewise, industry leaders apparently did not feel inclined to tell the students squirreled away on campuses that they may want to consider changing their major either, showing the disconnect works in both directions. It is also worth noting that anecdotally, academia and many government resource ministries and agencies have also had highly skewed age demographics over an extended period of time with lifelong employees not uncommon.  This presents an interesting conundrum for those academics who claim it is not their duty to train students for industry; surely, they must realize their students have to make a living somewhere…don’t they? I only realized in retrospect that I could not possibly have made properly informed career decisions as a young university student as I was completely in the dark and I see the same thing happening today at other schools. 

Some other issues to be aware of include that as “old economy” industries, the workforce historically, at least in the Western world, lacked diversity by today’s standards.  More recent efforts to change the composition of their workforces on a compressed timeline may impact you in different ways depending on your circumstances. I know for a fact this issue has been a hiring consideration for over twenty years now and more emphasis seems to be placed on it with each passing year.  In oil & gas, not having an employment history at a large company early in your career and the accompanying practical training and mentorship they provide will likely hinder your career prospects and progression as smaller producers and service companies typically claim (or actually have) the inability to afford the time and money to do so.  I can recall to my dismay as a recent graduate, finding out that after all my hard work I was basically considered a blank slate with little value to offer.  Additionally, resource-related technical skills tend to be highly specialized and are poorly or non-transferable to other industries in the event of a career change.  This means in addition to being more vulnerable to unemployment, you are also less likely to be able to find employment elsewhere.  This problem is compounded by the climate change mania and corporate ESG initiatives presently sweeping the Western world, which stigmatizes resource workers.  Perplexingly, even transferring between resource industries or to or from the environmental consulting service industry is also extremely difficult, perhaps just another sign of a saturated job market although cultural biases are rumored to come into play. 

You also need to mindful of the fact that unlike many lines of work, resource jobs are not found everywhere and tend to be concentrated in certain geographic regions, a trend that has accentuated over time as energy jobs consolidated in Alberta and employment prospects in mining declined in many places.  Moving to resource hot spots from elsewhere means competing with locals who attended schools that are more familiar to and generally preferred by employers, may have had summer jobs or co-ops with local companies, have established networks, and local mutual contacts for references etc. (it may not be apparent to outsiders just how cliquey the oil & gas industry is).  Without having relevant work experience under your belt by the time you graduate, you will likely find that your industry career is over before it started irrespective of your marks, as there are always many more graduates than jobs and the students with work experience are typically first to get hired.  Also, beware of falling into the trap of thinking that a graduate degree will solve your unemployment blues.  While it is true that an advanced degree can possibly help give you the upper hand in a competitive job market, in a non-existent job market no amount of education will help so make sure you don’t confuse the two (as many seem to do)! 

The bottom line is that these industries can be great for astute speculators with good timing but if you are a person who needs to rely on a regular paycheque and can’t afford to lose your job every time the economy hits a speed bump, you really need to try and understand exactly what you are getting into.  As happens all too commonly, by the time you figure out what’s what you will have already made a considerable investment in time, money, and effort towards your career and in my experience while trying to connect the dots you will be entirely on your own.  Your student advisors may be able to tell you which courses you need to graduate but when it comes to labour supply and demand in the economy it’s a non-starter. Just because your university is publicly funded and gladly takes your tuition money does not necessarily mean they are watching your back folks.  They have their own culture, priorities, objectives, and ideals, which may or may not be aligned with your best interests. I don’t deny there is value in a liberal or general postsecondary education, especially considering modern public school standards; however, that is a rather poor consolation prize for those who were led to believe they were getting and planned to have a livelihood after graduation.  I encourage you to do your own research and reach your own conclusions.  What I present here are simply things no one ever told me that wish I had known as a freshman.  Feel free to discount my opinion if you wish but I hope you will peruse the material below before you do.  Caveat emptor!

Articles of Interest (in no particular order)

• Alberta’s oil and gas Workers Wrestle with Layoffs and an Uncharted Future 
• Repsol Canada sheds 30% of its workforce, hitting Alberta hard
• Number of Canadians Employed by oil and gas Sector Falls by 14,000, Data Shows
• BP’s Century-Old oil Exploration Team gets Swept Aside in Climate Revolution
• U of C sees ‘Remarkable’ Drop in Undergrads Focusing on Oilpatch Engineering and Geology
• Most Canadian oil and gas Workers Fear for Their job: poll
• Alberta’s ‘Lost Generation’: Longest Post-War Recession Leads to Brain Drain Among Geoscientists
• Oilpatch Woes Boost Calgary’s Downtown Office Vacancy Rates to Record Levels
• Oilpatch Workers Ponder Leaving Sector as Megamerger Triggers Layoffs
• Penn West Petroleum, ConocoPhillips Canada slash Hundreds of Jobs
• Shell Plans to Slash up to 9,000 jobs Worldwide, Canadian Impact Unknown
• ‘They Didn’t Mess Around’: Hundreds Reportedly Laid off by Husky Energy in Calgary
• Cenovus to cut up to 25 per cent of work force after deal with Husky
• Calgary’s Downtown Office Vacancy Rate hits 29.2%, a new High
• A Fresh Wave of Layoffs is Pushing Albertans to the Edge — and in Danger of Losing Their Homes
• ‘This Truly is a jobs Crisis,’ says Kenney as Suncor Announces it will Eliminate up to 15 per cent of Staff
• Natural Resources Sector Suffers ‘Steepest Decline Ever’ with 43,000 jobs lost: StatsCan
• Jobless in Alberta: Tens of Thousands of Energy Professionals are out of Work and out of Hope
• Over a thousand workers face layoffs in Nunavut as Baffinland permit in limbo
• Western Canada’s Mining Sector Faces Bleak Employment Outlook: Report
• Downturn Diaries: Alberta’s Recent Graduates left Jobless due to Downturn
• Surge of Unemployed Alberta oil Professionals Seek Work
• Mass Layoffs in Alberta Nearly Double Past two Years Combined
• ‘It is so stark’: Young men left Behind in Alberta’s Recovery amid ‘Male-Dominated Recession’
• If you were Laid off When oil Prices Tanked, this Might Help you Launch a new Career
• ‘It’s kind of heartbreaking’: Unemployed Calgary Geophysicists Look for new Ways to use Skills
• What Does The Future Hold for Alberta’s Petroleum Geoscientist?
• No Easy Solutions for Albertans Facing Long-Term Unemployment
• Two Years Without a job: Calgary in the Downturn
• Trudeau Government Energy Policies Making Jobs and Investment Disappear
• No New Jobs Came from Alberta’s $4B ‘Job Creation’ Tax Cut for Big Oil
• Unemployment in Alberta – What Past Recessions Indicate About the Future
• Imagine an Alberta Where one in Four is Unemployed
• More Cost Cutting Likely as oil and gas Companies Seek Efficiencies: Industry Experts
• Unemployed Calgary oil and gas Worker Hopes for an Extension in EI Benefits
• Cameco Permanently Laying off Around 700 Workers
• Teck Resources Cutting B.C. jobs After Price of Coal Plunges
• Is Canada losing the exploration game?
• Commentary: Mining Industry in Manitoba is Near Collapse
• Thompson Bracing for job Losses after Northern Manitoba Mine Owner Admits to bleeding $300K a day
• Mining Investors Dramatically Downgrade Manitoba in Annual Survey
• Quiet Conversations but Little Mining, Exploration Action in Province
• Manitoba Less Attractive for Mining Investment, Conservative Think-Tank says
• ‘They’ve lost it’: Ontario Plunges from 7th to 20th in Ranking of Best Places to Mine in the World
• Geoscience: Ups and downs
• Rio Tinto to Suspend Operations at Quebec Titanium Mine
• Mining in Canada is Shrinking, and a Wave of Impassioned Community Opposition is Partly to Blame
• Canada’s Mining Sector in Jeopardy
• Addressing Canada’s Declining Mineral Industry Competitiveness
• Hundreds Laid off, Thousands of Jobs Delayed in Alberta Oilsands
• What to do When High-Paying Jobs Start to Disappear
• Timeline: Tracking the layoffs in Alberta’s Oilpatch
• Average Time Spent Unemployed has Nearly Tripled in Alberta in Last Decade, U of C Study Says
• This Time, They Mean It: Energy’s Baby Boomers Retire and Millennials Will Miss Them
• Historical Oil Shocks
• The Oil Price Crises of 1998–9 and 2008–9
• Putting the Current Oil Price Collapse into Historical Perspective
• Major Oil Market Crashes in History
• How COVID-19 Triggered the Mother of All Oil Crises
• Commodity Price Supercycles: What Are They and What Lies Ahead?
• Commodity Prices in the 1970s
• Commodities in the 1970s
• The 1972-75 Commodity Boom
• The Great Inflation 1965–1982
• Long-Term Commodity Index Charts
• A Short History of the Post WWII Oil price- From a Technical Perspective
• The Uses and Abuses of University
• Death of an Industry: The Decline of Canadian Mineral Exploration – Part 1 of 2
• Death of an Industry: The Decline of Canadian Mineral Exploration – Part 2 of 2
• Consolidation Is Killing Jobs in the U.S. Shale Industry
• Exxon Prepares to Cull White Collar USA Jobs
• Schlumberger Cutting 21,000 Jobs In Reorganization After Bruising Quarter
• Shell Begins Hundreds of Job Cuts in Push to Boost Performance
• Australian Miner Bails on Quebec Rare Earth Projects Amid First Nation Resistance
• One in Three Geologists Unemployed or Underemployed: Australian Institute of Geoscientists Survey
• Unemployment Twice as High amongst Mining-Related Professionals
• Light at the end of Jobless Tunnel for Geos?
• Lowest Geoscientist Unemployment in Nine Years
• Job cuts to Escalate in South African Mines as Global Economy Slows
• Dear State Treasurers…an Open Letter from G&R
• Colorado School of Mines Warns of ‘Grey Tsunami’ of Mining Industry Retirements
• Energy Workers Switch to Other Professions in Droves as Work Dries up in Once Booming Sector
• 2020 In Review: Oil And Gas Employment And Labour Force Data
• Sectors at Risk: The Impact of COVID-19 on the Canadian Oil and Gas Sector
• Employment Characteristics for the Oil and Gas Sector
• Nickel Faces Existential Moment With Half of Mines Unprofitable
• ‘Wow, nobody wants to buy us’: Investors Exit as Gold Prices Surge
• Mining Industry Risks Another Lost Decade
• Job cuts Announced at Lac des Iles Palladium Mine
• Albemarle lays off 300 Employees on Weak Lithium Prices
• Navigating Career Stability in Mining
• Long-Term Unemployment in Alberta
• Alberta Government Leadership on Energy Diversification Needed to Create Jobs Lost to Oil and Gas Automation
• 50,000 Alberta O&G Workers Lost Their Jobs Since 2014
• Alberta Oil and Gas Jobs Machine Permanently Broken
• Geoscience Programs Evolve Through Declining Enrollment
• Urgent Action Needed to Stem Slump in Geoscience Graduates Globally — Report
• The Imminent Geologist Shortage
• Contrary to Industry Claims, Red Tape not Slowing B.C. Mineral Boom, Finds Audit
• The American Industry That Wants More Government Intervention
• AB Lost Over 10K oil & gas Jobs in March 2023
• Oil Booms Have Meant Good jobs in Alberta. But What Does the Future Hold?
• Chevron to lay off up to 20% of Global Workforce
• Canada’s Economy is Struggling. Natural Resource Development can Help Turn Things Around.
• Canadian Competitiveness in Resource Development – A Post-Mortem: Heather Exner-Pirot
• Impact Assessment of the Oil and Gas Emissions Cap
• Think Twice
• Decline in geoscience majors, shriveling departments, and shrinking workforce
• The ‘Valley of Death’ for Canada’s Mining Companies
• Several Hundred People Laid off After Open pit Mining Abruptly Stops at N.W.T.’s Ekati Diamond Mine
• Alberta oil Jobs Take a hit as Cenovus Energy Announces new Layoffs
• ConocoPhillips Says it Will cut Workforce by 20-25%, Shares Fall

Relevant Books & Resources (in no particular order)

• Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market
• Principles of Commodity Economics and Finance
• The Economist Guide to Commodities: Producers, players and prices; markets, consumers and trends
• The Prize: The Epic Quest for Oil, Money & Power
• Crude Volatility: The History and the Future of Boom-Bust Oil Prices
• Petroleum Labour Market Information (PetroLMI)
• FRED Economic Data – Commodities
• Trading Economics
• Macrotrends
• Minerals Sector Employment
• Canadian Mining Labour Market Outlook
• Status of Recent Geoscience Graduates 2017
• Recent Geoscience Graduate Employment Trends, December 2020
• U.S. Geoscience Enrollments and Degrees Collapse in 2019-2020
• U.S. Geoscience Enrollments and Degrees through 2021
• Job Displacement in the Oil and Gas Industry in Canada

Relevant Services

• Higher Landing