Falling oil prices create stress. You only have to listen to the news or read the newspaper to sense the fear as oil prices fall.
Stock prices fall, which has many concerned about their investments. Jobs are lost. Falling oil prices mean engineering consulting firms lay-off drafters and support staff as they move to cut costs. Accounting firms have less real and anticipated work because their clients cut back on nice-to-have projects and ask for more basic services. The same goes for law firms. There will be less in-house work done at oil companies and fewer jobs in construction camps because projects are postponed or cancelled.
Competition for jobs becomes tougher because people apply for fewer jobs.
Older adults who have already been around the block a couple of times with respect to the rise and fall of oil prices, or of any commodity come to think of it, aren’t too surprised that oil prices are down again. They understand that prices are cyclical and plan for that cycle. They know that the hay day of high oil prices is always followed by a downturn. It is this knowledge that allows them to feel less stress when oil prices fall because they prepare themselves for when it happens.
These experienced adults, or children who watched their parents cope with historic downturns, don’t live above their means. They know they need to save money for rainy days that will come. They know that high salaries that come with working in the oil industry are partly there to attract workers when demand for employees is high. They may consider the high salaries to be risk pay for when downturns come along because they know these same jobs may be cut.
Market pulp, which is used to make paper, is a commodity that is priced much like oil. When demand is high, prices are high and jobs are plentiful. When demand is low, prices are low and jobs are lost. Or at least that was the case from the 1960s through the 1990s when Canada was a huge global player in market pulp.
The following story is about an individual who lost his job when a downtown in the price of market pulp came.
(Details in the following story have been changed to protect privacy).
Matt and Angela were coworkers. Matt had been laid off due to low prices for market pulp as the industry experienced a downturn. Angela, who had worked in the industry for quite some time, had little sympathy for Matt. She told him to get used to the idea that he had lost his job and would likely lose his job another five or six times before retirement.
Angela said her sympathies, rather than with Matt, were with the accountant who owned the house down the street from her because he had come of age at a time when people expected to remain in one job until they retired. She said the accountant was in his early 60s and had been unable to find work for the past two years.
Today, Matt considers himself lucky to have had that conversation with Angela because he took her advice to heart. As each downturn came, he became better prepared to weather the storm. Matt asked himself the same series of questions. What just happened? Did I see it coming? Am I prepared for it? What can I learn to do differently next time?
For people who aren’t fortunate enough to have had an Angela in their lives, here is the message she gave to Matt: Set money aside for the next downturn. Don’t expect to always work 12-months a year. Expect to get laid off and to have to wait until the market rebounds to be fully employed again. Pursue more education if you can’t hang onto your job during a downturn. Find a profession that is more resilient during downturns if the one you have is too precarious. Maybe get your journeyman’s papers. Or plan to travel until prices rebound.
It would be misleading, however, to only look at the downside of falling commodity prices. I hear from people who work in the oil industry that periods of low prices are necessary for the health of the industry. This is some of what they say.
When prices turn down, employees have a chance to breathe. There are not enough skilled employees in Calgary to do all the work when oil prices are high. As a result, those who work in the industry have to scramble and their work loads don’t let up while oil prices are high. They can become exhausted over the longer-term.
When prices turn down, however, the opportunity exists for these people to slow down. Travel requirements are reduced. More employees arrive home in time to eat with their families. More people have a chance to use their accumulated vacation time to rest up.
When there isn’t enough skilled labour to fill all the job vacancies because oil prices are high, firms hire more less-skilled labour and rely on those less-skilled workers to complete tasks that stretch them. Sometimes the stretch is too great and the work isn’t done well.
When oil prices fall, however, firms can either let go of their least skilled workers, or thelp them upgrade their skills and acquire the knowledge they will need when the next upswing hits.
Firms sometimes use a downturn as an opportunity to let go of workers who aren’t a good fit. This approach can be a good thing for both firms and employees. I have observed that people often find themselves in a better place after they have been terminated because their search for new work can lead them to a place where there is a better fit.
Neglected projects can be given attention when oil prices fall. Every company put projects on the back burner when things get busy because there just aren’t enough hours in the day to get everything done. Sometimes the projects that are neglected are critically important, however, and firms can focus their attention on these projects during downturns, which helps them position themselves to run well again when things pick up.
Whether you are someone that experiences stress when oil prices fall, or someone that sees the opportunity to step back and regroup when prices fall, it makes sense to track what oil prices are doing. Try to learn from the people who have been around the block a couple of times so you aren’t caught unaware the next time the cycle repeats itself.
I had a conversation with a colleague who has watched the cycle for more than 20 years. He said that Calgarians who work in the oil industry over the longer-term learn the cycle and figure out how to work within it. He said others who come to the city during boom periods tend to leave during bust periods. And that’s okay – especially if they are aware of the boom and bust cycle that the oil industry follows and learn to plan for the downturns, too.
Dr. Patricia Turner, Registered Psychologist, Calgary, Alberta
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