That’s the question Sabrina Burns, a petroleum engineering student got from an Uber driver in 2018. She and some fellow students were headed to a petroleum industry banquet, and at the time it seemed a little silly. While many younger people questioned the wisdom of going into the oil industry, conventional wisdom held that the oil industry is a great career.
While students in other majors and other people she knew questioned the wisdom of being an oil major, her parents persuaded her to stick with the oil industry. Her father, who worked as a helicopter pilot, met a lot of successful women working as engineers on offshore oil rigs. On top of that, older generations probably have a harder time imagining a world in which the oil industry isn’t stable, lucrative, and essential to everyone’s lives.
2020 threw these older generations and any younger believers a curveball, though. “We got a slap in the face, an entirely unforeseen situation that rocked our entire mind-set,” said Ms. Burns when asked about her prospects by Clifford Krauss at The New York Times. “I have applied for every oil and gas position I’ve seen, like all my classmates, and nothing really has turned up. I’m discouraged.”
What was once seemingly invincible was now stumbling and couldn’t be counted on.
The biggest blow to graduating oil students was the sudden drop in oil demand due to the pandemic. Oil products like gasoline and jet fuel weren’t needed nearly as much because people worked from home, many businesses were closed, and travel was avoided. With all of this lost demand despite ample supplies, prices tanked.
With such low demand and low prices, the industry took a big hit. Over 100,000 people were laid off. Workers weren’t needed in the field to pump oil that wasn’t needed, and refineries were closed. Some oil companies even declared bankruptcy.
This stands in stark contrast to the better years, when these students started their college careers. The oil industry and the faculties of colleges felt they could promise great careers, with lots of job security and a good income. Under Donald Trump, shale drilling and “fracking” took off, and the United States became the world’s largest producer of oil. There had been booms and busts in the industry in the past, but those seemed to affect less educated field workers, and not people with engineering or geology degrees.
With these prospects gone, and future climate change issues seeming likely to hurt the industry even after the pandemic is over, oil students are looking at other options going forward. Sabrina Burns told The New York Times that she’s looking to intern in a related but different field, and that she may need to go back to school for a graduate degree in Environmental Science to have a better career. She is even considering moving in with family to make ends meet while recharting a new course for her career.
In the same article, Krauss goes on to interview a number of other students in the industry. Their stories are all pretty similar. Some expect the industry to bounce back, and are biding their time. Others are looking to take on a graduate degree while waiting, but are hedging their bets by majoring in something else for their master’s degrees.
One student actually landed a job, but the company is looking at diversifying to avoid future exposure to what could be a failing industry in future years. He is glad to have found a job, but worries that his education and skills he’s building won’t transfer well to other parts of the energy economy.
Some Things We Can Learn Here
Readers of CleanTechnica are probably having an “I told you so” moment reading this. People following the energy industry could see that renewables, battery storage, and other technologies aren’t competing with oil just yet, but have a much brighter future than oil, which isn’t growing. Oil is still big, though, and has a lot of inertia, so it’s not going away now or even in the next four years under Biden and then likely Harris.
What many (even among us) didn’t foresee was how oil’s newfound weakness would leave it more vulnerable to crises, like the one we currently face with COVID-19. Oil is weakening and growth has less potential than ever, but at the same time it wasn’t shrinking. A sudden jolt in demand for gasoline, jet fuel, and diesel hit them hard, though.
Few people fully avoided the impacts of the tsunami of COVID, but electricity is a lot more diversified. In my home, we use electricity for heating, cooling, and most of our driving. We use it for lighting, entertainment, cooking, and security. The cats and dog even have toys powered by electricity. When we turn on the tap, electric pumps somewhere else in town provide the pressure. LED street lamps light the street in front of our home.
Sure, I drive a lot less now not taking the kids to school, but our overall power bill didn’t take a huge drop.
On the other hand, our use of gasoline took a HUGE hit. In the last nine months, we’ve spent far less than $200 on the stuff. The occasional trip to the next town makes our Nissan LEAF struggle for range, and we’ve driven there on gasoline power only twice. The prior year, we probably did this dozens of times. Trips to see family, where we need to pile the whole family into the family SUV, are also a lot more rare. A tank of gas used to last one to two months in those vehicles, but now last three to four, if not more.
We don’t use gasoline for anything else, so oil companies are taking a much bigger hit than companies involved in electricity generation, whether they’re renewable or fossil fuel-powered. Even when fossil fuels are used to generate, very few power stations run on oil. Natural gas is far more common, and comes from a related but different industry than oil.
Another important lesson we can find here is that it’s wise to question the prevailing narrative. Yes, oil has been very strong in the past, but that doesn’t mean it will necessarily be strong in the future. No industry is a sure bet, but this was an area where generational bias caused parents to mislead their children into a bad career move.
This is no trivial thing. Most of the students will go on to find another career, and some will eventually succeed in oil as the pandemic ends. However, they’ll still have tens of thousands of dollars of debt that they wouldn’t have had, and a harder time servicing that debt than they would have had if their parents had been more forward looking.
Oil is Not Invincible
On the other hand, there’s a silver lining. Seeing oil stumble shows us that it’s not invincible. As Ivan Vanko in Iron Man 2 says, “If you could make God bleed, people would cease to believe in Him. There will be blood in the water, the sharks will come. All I have to do is sit back and watch as the world consumes you.”
If you don’t remember the film, Iron Man (a character partially modeled after Elon Musk) is at the top of the world and the top of his game, giving global leaders security with his unique Iron Man suit. He seemed invincible until someone with his father’s arc reactor technology attacks him, only narrowly losing the fight. Once he didn’t seem invincible, a variety of enemies emerged, including business competitors and government officials who wanted to take him down when he seemed weak.
A similar moment is happening with oil. It seemed like a god, but now it’s a god that failed. Its blood is in the water, and the sharks are definitely circling. It might sound too dramatic to use the imagery of sharks here, but imagine being a student $50,000 in debt with no job prospects. The fear is quite real for some.
Don’t assume that oil is some Goliath that can’t be beat. All it took was a rock in just the right place (COVID-19) to bring him down.
Jennifer Sensiba is a long time efficient vehicle enthusiast, writer, and photographer. She grew up around a transmission shop, and has been experimenting with vehicle efficiency since she was 16 and drove a Pontiac Fiero. She likes to explore the Southwest US with her partner, kids, and animals. Follow her on Twitter for her latest articles and other random things: https://twitter.com/JenniferSensiba
Do you think I’ve been helpful in your understanding of Tesla, clean energy, etc? Feel free to use my Tesla referral code to get yourself (and me) some small perks and discounts on their cars and solar products. https://www.tesla.com/referral/jennifer90562
High unemployment rates, oppressive regimes and a desire for better education are some of the reasons cited by Arabs who express a desire to leave their countries.
The Arab world has seen a lot of its youth move in search of better opportunities for employment, freedom of expression, in addition to escaping from social and cultural norms they find oppressive.
According to an August 2019 poll by the Arab Barometer company, titled “Youth in the Middle East and North Africa,” the daily living situation in the region is far from ideal.
Noting that youth between the ages of 15 to 29 comprise about 30 percent of the Middle East and North Africa (MENA) countries, the Arab Barometer finds a significant number of them dissatisfied with their economic prospects.
They are also not happy with the education system. Moreover, “less than half say the right to freedom of expression is guaranteed”. Then there’s the high unemployment rates and widespread corruption.
This is why, Arab Barometer suggests, youth in the MENA region are more likely to consider emigrating from their country than older residents. The preferred destinations are varied, including Europe, North America, or the Gulf Cooperation Council (GCC) countries.
Another survey by Arab Barometer, titled “Migration in the Middle East and North Africa,” published in June 2019, notes that across the region, “roughly one-in-three citizens are considering emigrating from their homeland.”
The surveys were conducted with more than 27,000 respondents in the MENA region between September 2018 and May 2019 in face-to-face interviews.
According to the Arab Barometer’s findings, there had been a decrease in people considering emigrating from 2006 to 2016. Yet since 2016, the trend is no longer in decline but has shown an increase “across the region as a whole.”
The Arab Barometer finds that citizens are “more likely to want to leave” if they are young, well educated and male. The survey has found more than half of respondents between the ages of 18 and 29 in five of the 11 countries surveyed want to leave.
While older potential migrants are more likely to cite economic factors as the primary decision, the survey suggests, younger ones “are more likely to name corruption, for example.”
As for the desired destination countries, they vary according to the homeland of potential migrants. Among those living in the Maghreb countries of Algeria, Morocco and Tunisia, Europe is the favoured destination.
Whereas migrants from Egypt, Yemen and Sudan point towards Gulf Cooperation Council (GCC) countries. The survey has also found that those from Jordan or Lebanon prefer North America, notably the US or Canada.
The survey also notes that while most would only depart if they had the proper paperwork, young males with lower levels of education who may not see a positive future in their homeland have said they would be willing to migrate illegally, “including roughly four-in-ten in six of the 11 countries surveyed.”
In a blog post for Unesco’s Youth Employment in the Mediterranean (YEM) published in January 2020, Sabrina Ferraz Guarino observes that “Migration is a coping mechanism based on the assumption that moving to another country is the best and most efficient investment for their own and one’s family future” and that improving people’s lives in their home countries will likely result in less desire to migrate.
Guarino says the unemployment rates in the Mediterranean region affect youth the most: “Unemployed youth are the highest in Palestine (45%), Libya (42%), Jordan (36.6%) and Tunisia (34.8%), while Morocco (21.9%) and Lebanon (17.6%) fare relatively better.”
She adds: “Viewing this together with the share of the youth that is not in education, employment or training (NEET), reveals how the challenges of youth employment remain self-compounding. The youth NEET rates tally around 14% in Lebanon and 21% for Algeria, but progressively increase across Tunisia (25%), Jordan (28%), Morocco (28%), and Palestine (33%).”
In its MENA report published in October 2019, the World Bank says growth rates across the region are rising but are still below “what is needed to create more jobs for the region’s fast-growing working-age population.”
The World Bank recommends reforms “to demonopolise domestic markets and open up regional trade to create more export-led growth.” Source: TRT World
Posted on March 8, 2020, in The Arab Weekly, Six decades after independence, Middle East still looking for growth model by Rashmee Roshan Lall is an accurate survey of the region that faces, as we speak, prospects of harshest times. How is the Middle East still looking for a growth model? Investing in the human capital of children and young people as well as enhancing their prospects for productive employment and economic growth is little more complicated than relying on Crude Oil exports related revenues. These are the main if not the only source of earnings of the region now plummeting perhaps for good before even peaking. In effect, all petrodollar inspired and financed development that, put simply, was transposed from certain parts of the world, using not only imported materials but also management and all human resources can not result in anything different from that described in this article.
Though a large youthful population would normally be regarded an economic blessing, it’s become the bane of the MENA region.
It’s been 75 years since World War II ended and the idea of decolonising the Middle East and North Africa began to gain ground but, while formal colonisation ended about six decades ago, the region seems unable to find a clear path to growth.
Rather than an “Arab spring,” what may be needed is a temperate autumn, a season of mellow fruitfulness to tackle the region’s biggest problems. These include finding a way to use the demographic bulge to advantage, reducing inequality of opportunity and outcome and boosting local opportunity.
Here are some of the region’s key issues:
The MENA region’s population grew from around 100 million in 1950 to approximately 380 million in 2000, the Population Reference Bureau said. It is now about 420 million and half that population lives in four countries — Egypt, Sudan, Iraq and Yemen.
The 2016 Arab Human Development Report, which focused on youth, said most of the region’s population is under the age of 25.
The youth bulge is the result of declining mortality rates in the past 40 years as well as an average annual population growth rate of 1.8%, compared with 1% globally. The absolute number of young people is predicted to increase from 46 million in 2010 to 58 million in 2025.
Though a large youthful population would normally be regarded an economic blessing, it’s become the bane of the MENA region. The demographic trend suggests the region needs to create more than 300 million jobs by 2050, the World Bank said.
Jihad Azour, International Monetary Fund (IMF) director for the Middle East and Central Asia, said MENA countries’ growth rate “is lower that what is required to tackle unemployment. Youth unemployment in the region exceeds 25%-30%.” The average unemployment rate across the region is 11%, compared to 7% in other emerging and developing economies.
Unsurprisingly, said Harvard economist Ishac Diwan, a senior fellow at the Middle East Initiative, young Arabs are unhappier than their elders as well as their peers in countries at similar stages of development.
Last year’s Arab Youth Survey stated that 45% of young Arab respondents said they regard joblessness as one of the region’s main challenges, well ahead of the Syrian war (28%) and the threat of terrorism (26%).
The region’s population is expected to nearly double by 2030 and the IMF estimated that 27 million young Arabs will enter the labour market the next five years.
Poverty and inequality
Most Arab people do not live in oil-rich countries. Data from the UN Economic and Social Commission for Western Asia (ESCWA) stated that 116 million people across ten Arab countries (41% of the total population), are poor and another 25% were vulnerable to poverty. This translates to an estimated 250 million people who may be poor or vulnerable out of a population of 400 million.
The MENA region is also regarded as the most unequal in the world, with the top 10% of its people accounting for 64% of wealth, although the average masks enormous differences from one country to another.
The middle class in non-oil producing Arab countries has shrunk from 45% to 33% of the population, ESCWA economists said. In a report for the Carnegie Corporation last year, Palestinian-American author Rami G. Khouri described what he called “poverty’s new agony,” the fact that a poor family in the Middle East will remain poor for several generations.
Egypt is a case in point. In 2018, Cairo vowed to halve poverty by 2020 and eliminate it by 2030. However, Egypt’s national statistics agency released a report on household finances last year that said that 33% of Egypt’s 99 million people were classified as poor, up from 28% in 2015. The World Bank subsequently nearly doubled that figure, saying 60% of Egyptians were “either poor or vulnerable.”
Wealth gaps between countries are greater in the region than in others because it has some of the world’s richest economies as well as some of the poorest, such as Yemen.
Inequality is not the only problem in the region. Former World Bank economist Branko Milanovic said the uneven picture means that last year’s protests in Lebanon, Algeria, Sudan and Iraq cannot be explained by “a blanket story of inequality.”
Indeed, Algeria, a relatively egalitarian country, was roiled by protests, first against a long-serving president and then against the wider political system.
French economist Thomas Piketty, who wrote the bestselling book on income inequality, “Capital in the Twenty-First Century,” said Arab countries must come up with a way to share the region’s vast and unequally distributed wealth.
Lost decades of growth
In the decade from 2009, the region’s average economic growth was one-third slower than in the previous decade. The IMF said per capita incomes have been “near stagnant” and youth unemployment has “worsened significantly.”
The state is the largest employer in many Arab countries and over-regulation of the private sector left it underdeveloped and unable to overcome the significant barriers to trade and economic cooperation across regional borders. Meanwhile, inflexible labour laws stifled job creation and cronyism allowed inefficiency to stay unchallenged. In 2018, the average rank of Arab countries on the World Bank’s Doing Business survey was 115th out of 190 countries.
Along with structural factors, conflict has had a debilitating effect on economic growth. Three years ago, the World Bank noted that the Syrian war had killed approximately 500,000 people, displaced half the population — more than 10 million people — and reduced more than two-thirds of Syrians to poverty.
By 2017, conflict in Yemen and Libya had displaced more than 15% and 10% of their respective populations of 4 million and 6 million. Taken together, the Syrian, Yemen and Libyan civil wars have affected more than 60 million people, about one-fifth of the MENA population.
Infrastructural damage runs into the billions of dollars but it is the loss — or outright collapse, as in Yemen — of economic activity that has affected real GDP growth.
Countries in the region affected by conflict lost $614 billion cumulatively in GDP from 2010-15 — 6% of the regional GDP, ESCWA’s 2018 report on institutional development in post-conflict settings stated.
New thinking needed
This is the year when, for the first time, an Arab country holds the chairmanship of the Group of 20 of the world’s largest economies. It could be an opportunity to consider existing trends within the region, what needs to be changed and how.
In the words of Oxford development macroeconomist Adeel Malik, “the Arab developmental model… seems to have passed its expiration date.” In a 2014 paper for the Journal of International Affairs, Malik said “failure of the Arab state to deliver social justice is ultimately rooted in the failure of a development model based on heavy state intervention in the economy and increasingly unsustainable buyouts of local populations through generous welfare entitlements.”
It’s a good point, for the region’s richest countries just as much as its poorest. Oil-rich states are affected by dramatic changes in oil prices and the increasingly urgent suggestion that the world is at “peak oil.” An IMF report warned that, by 2034, declining oil demand could erode the $2 trillion in financial wealth amassed by Gulf Cooperation Council members. The IMF said “faster progress with economic diversification and private sector development will be critical to ensure sustainable growth.”
Creativity and courage will be needed if the Arab world is to meet the expectations of its youthful population and the challenges posed by its increasing inequality.
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