In January, Oil & Gas Financial Journal printed a letter from a reader in California who chastised the petroleum industry for creating worker shortages by “consolidating their businesses to Houston and the Gulf Coast.” He went on to boast about the many fine attributes of living in California and added that “Houston is a dreary, foggy, cloudy, polluted, and ugly place most of the year.”
The solution to the industry’s worker shortage, says the writer, is for the industry to start distancing itself from what he calls “the Houston, Texas A&M, and UT engineering cabal where the talent is lacking due to the pervasive incestuousness of the grading and networking scheme.”
He concluded, “We don’t want to work in Greenspoint, we don’t want to live in Katy, and we don’t want our kids to grow up with a ‘twang.’” For obvious reasons, we didn’t print the name of the letter-writer, who lives in Thousand Oaks, Calif.
Rather than responding, OGFJ invited readers to give us their thoughts about the subject. Here are excerpts from a few:
SM: The greying of the petroleum workforce has more to do with underinvestment in talent in the 1990s than anything else.
When oil was $20/bbl, or whatever it was in 1995, when it seemed like only lubricants was making any money, there were no jobs to be had for guys just out of engineering school. As a result, guys like me (from Houston) went into electrical engineering rather than petroleum.
Now there are no guys available in their 30s and 40s to replace guys in their 50s and 60s, who are retiring.
If you want talent in the pipe, you have to put money down the pipe.
The California problem is a separate problem, and it's one that I know something about. California is 2nd in the nation in college education of over-50-year-olds. It's 26th in under-35-year-olds.
You get out of engineering school, and California wages are within 5-10% of Houston wages. But the cost of housing in CA is 200% of the cost of living in Houston. And there's a state income tax.
Talented people educated in California leave. Talented people educated elsewhere don't come.
Part of the problem in CA is geography (between an ocean and mountains). Part of it is land use regulations.
Companies leave, too. They may not move HQ, because the top echelon can afford the taxes and the real estate, but companies locate jobs where the workforce is available.
Because I work in technology, I know a great deal about that phenomenon. HP's largest employment location is Houston, largely because the cost of engineering talent is so much lower (e.g., the A&M cabal is headquartered 90 miles away and can provide steady outflows of talent).
Small business bails out, as well. My two previous employers were both small businesses founded by California refugees who wanted to own homes or access of the more readily affordable talent in Texas.
Heavy industry bails out because the regulations are stifling. If California isn't careful, it will wake up in 20 years with virtually no middle class. You'll have .com millionaires in the hills and their domestic servants in the smoggy valleys, with very little opportunity in between.
The Californians, like the Greeks, should quit blaming other people for their problems and start asking how to make their economy more competitive.
DB: Please tell the writer of the letter a deep and heartfelt "thank you" from we poor ignorant masses here in Texas.
We are thrilled that he has chosen to keep his snobby, elitist, ignorant attitude in Thousand Oaks. We have quite enough Californians here already with their screwed-up, high taxes, welfare state mentality. We don't need even more bringing their attitude and their votes to visit the failure that is California government upon Texas.
No doubt that much of California is much preferable in beauty and climate to the Texas Gulf Coast. Part of that is because you have shipped your energy production and pollution to states like Texas. You're welcome. Congratulations on making it such a horrible business environment that companies can't pay engineering grads enough to work there.
RP: I read the January, 2012 editorial regarding Houston/Gulf locations and the reader's bitter taste. I guess one can always be bitter, or one can choose to be positive. As a former employee of a large oil company, I resigned voluntarily 10 years ago since I did not want to end up in Houston. No offense against Houston, it was simply a personal choice for my career, family, etc... My preference was to live in a smaller town, in the mountains, no commute, and raise a family in that specific setting. Your discomforted reader missed the boat - there are always options. With so many independents, one can choose to live anywhere and work in nearly any setting. One can work for a service company, a mid major, large independent, super major, you name it. One can work in Texas, Oklahoma, Kansas, Oklahoma, Utah, Pennsylvania, New Mexico, California, Montana, North Dakota (or a multitude of other states) --- the last I looked, these locations all had jobs and offices not based in Houston.
As a former Californian, born and raised, I laughed at the reader's bias. Yes, some very sharp minds are in California at those universities, my nephew is one of them. I believe that the reader has been caught up with "having to work for a large major" and has not realized the choice abound. Even northern California has geothermal activity outside of Reno for those who want to live and work around beautiful Lake Tahoe.
Everything is a choice, and I think the reader needs to see the choices. One can complain the jobs have moved out of California, OR look at that as an opportunity to be a consultant and an area expert since all the expertise has "left" the state. It is all perspective and choice. One can be positive, or bitter, your choice. Having worked in a number of places, I still have friends all over the USA and the world. There are many great people working in many small towns and cities because that is where they enjoy their life.
No offense to Stanford, Cal-Berkeley, etc..., but they offer a very limited scope of petroleum engineering or geology based disciplines. Neither a major or independent would likely go recruit a PhD for reservoir modeling and LIMITED practical experience. Until California colleges and universities can offer real oil and gas based programs such as Texas, Texas Tech, Montana Tech, etc...they simply cannot and will not produce these sharp minds geared towards the oil/gas industry. It will take a company and a university, working together, to break that mold in California, and find success...which will breed more growth in-state.
LH: Thank you for opening this reader’s forum to the issue of workforce and the question as to whether Houston contributes to the problem. I work for a fast-growing service/technology provider company supporting the oil and gas industry and I wholeheartedly agree with Anonymous from Thousand Oaks (though I would have voiced it a bit more delicately). I appreciate that long-term Houstonians love their city and I respect that. But attracting and keeping young people – both male and female – in Houston is extremely difficult. After losing two fantastic employees within their first year of employment, I finally took the advice of an dear friend who has lived in Houston for many years, and I now focus on hiring people that have lived here for many years already. However, this critically limits the long-term available pool of talent.
JW: Sadly your California reader’s opinion of Houston is common. I have lived and worked in the oil industry in Houston for 32 years and have had opportunities to relocate other places. Ultimately I thought it wise to stay here because I have had friends relocate to Denver, LA, San Francisco, etc. only to be laid off in a down cycle and unable to find a job. I have always been able to find work here. Is he saying he likes LA’s earthquakes, Denver’s winter, or San Francisco’s housing prices? Please, every city has problems.
CB: I found it interesting that the writer from California rips the arrogance of Houston, yet his letter drips with the California variety.
SC: Responding to Anonymous, Thousand Oaks, California, I would say: Probably no O&G executive would hire you or any one with your attitude especially after you answered this question: Have you ever worked or would you work on the North Slope, the Persian Gulf, or where oil and gas is typically being discovered/produced today?
No doubt the West Coast has some beautiful scenery (like during a traffic jam on Highway 101 in LA or SF any time of day), but Texas has its own, e.g. Big Bend, the Hill Country, or Memorial Parkway. Anonymous, do stay in California, but don’t ask Texans to help pay your taxes, gas, or other living expenses. Also, you and other West Coasters, please, please, please stop retiring here.
SRF: Grew up in New Mexico, lived in Lafayette and New Orleans a long time, and have to agree Houston is boring at best living in the burbs with long commutes in. If you live inside the Loop then you have access to great restaurants, culture, etc., but out in Katy it’s basically take-out pizza and tract housing with no privacy as a price to pay for good schools and cheaper housing. I will say many young people like Houston that live and work inside or near the inner Loop.
I personally think many oil companies relocate here because the owners/executive management live inside the Loop or in upscale neighborhoods near where they work.
When my days are done, leaving Houston will be my first move that did not leave me sad (and that includes leaving Midland). Quite telling in that many people even from Texas don’t retire in Houston.
A lot of my neighbors in Katy from all industries/walks of life stay about 1 to 3 years and then going back home wherever that may be (California, Kentucky, Ohio, Louisiana, etc.). I do agree that much Houston development involves the ubiquitous strip centers of dry cleaners/nail salons/pizza/kolache shops and very little thought to building an aesthetic city.
A little miffed though about the California author’s digs on “twangs” and comments of incestuous networking (no I did not go to college in Texas). I would like to live in California and had the chance, but did not want to pay 10% state income tax, and a whole slew of other taxes to support the political mess out there.
Maybe oil companies will relocate to Austin? Or back to Lafayette? Or some nice East Coast locales for Marcellus?
KBD: We don’t live in fairy (la-la) land, and California hasn’t welcomed the petroleum industry there in a long time. The next time you drive your car, turn on your electricity, touch any product made as a result of petroleum extraction, or think about the reduction in our reliance on foreign oil production, you can largely thank a Texan, and that’s with a capital “T” to that letter writer.
RJS: In response to “Anonymous in California” I offer the following thoughts. To wit: Calling some other place ugly because of your opinion about your place is just sooooooo Californian. . .I was born in Canton, Ohio, and raised in Yonkers, New York, but have lived most of my life in Oklahoma (Oklahoma City and Tulsa). You have your garden spot and I have mine. Calling one another names is silly and childish . .Your comments certainly don’t promote California. Everybody’s life is what they make of it. Just because it doesn’t fit your perfect picture doesn’t mean it doesn’t fit theirs. Stay in California. It’s where you belong.
JH: Californian, I don’t want to live, work, and raise my family in a bankrupt state with high taxes and even higher living costs. . .The writer is describing California of 40 years ago. . .California today is another place from which bright, motivated folks seeking opportunity (whatever that means to each) depart. Those who “feel” their facts should continue to migrate to California and Massachusetts until they have the numbers to join the new Soviet Union. We don’t want a ride on that trolley.
PWM: There is only one place I would find less desirable than Houston and that is Anyplace, California.
B. K.: “I had to laugh when I read your reader’s letter. The only thing he got right was listing Stanford first among the top universities in the state (just kidding, although in the spirit of disclosure I graduated from Stanford University and returned to get my MBA there as well). What I can tell you is that 6 years of studying business and economics in California taught me that it is the last place I should live if I want to accumulate any wealth whatsoever. I proudly live in a suburb of Houston, and ‘black swan 43 days above 100 degrees’ Summer of 2011 aside, I love it here. People in California con themselves in believing that it’s the place where heaven and earth hold hands. Of course, when they have been unemployed for three years (like a close relative currently is) – they have plenty of time to conjure up superlatives for the People’s Republic of California. Californians also have such inspired leadership in government with limousine liberals like Nancy Pelosi, Barbara Boxer, and Dianne Feinstein, who can afford to live in a state where a very small percentage of the population can afford a home, despite very low property taxes (thanks to Prop 13) that have crippled the state’s finances, and especially its educational system. I have to wonder: who are the arrogant dwellers of the Ivory Tower? Houstonians? I think not.
Mike T. in Highland Village, Tex.: “This fellow should look around his state and see that our industry has been leaving California since 1969, when the Santa Barbara oil spill occurred, launching the punitive and regulatory atmosphere which has smothered the business and continues today. Although California does not own a monopoly of unfriendliness to the oil and gas industry, it is perhaps the worst place to do business, any business, in our country. People who are able to leave have been leaving the state in droves for the past quarter-century at least. He is correct in his statement of history, however; California was formerly a golden land of opportunity, with great oil and gas fields, as well as petroleum engineering schools (Stanford, UCLA). No longer. The people of the state have spoken loudly and clearly – they want no industrial development or manufacturing in their backyard, high taxes, an open (southern) border, and the likes of Nancy Pelosi representing them in Congress, while an old Jerry Brown reprises his geriatric ‘moonbeam’ governorship.”
L. T.: “While having never worked in the USA and only having visited California, I must agree with your anonymous letter this month. My oil and gas career started with a Masters degree in Edinburgh, Scotland and then for work I moved 3 hours up the road to Aberdeen. Edinburgh is the Cheese to Aberdeen’s Chalk. Edinburgh is one of the most beautiful cities in Europe with a network of cultural activities to rival any city its size in the world. Aberdeen is the oil and gas professional hub for Europe, and correspondingly, it has dreary architecture, a stagnant population and all the vibrancy of a concrete brick. All the major and significant independent oil companies have set up camp in Aberdeen, along with the large service companies. In Edinburgh lives the young, promising, and exciting exploration companies. Do you see a pattern beginning to emerge? My fellow Generation Y oil and gas professionals all agree that of the places to live and work in Europe, Edinburgh is up there with the best. Edinburgh also offers real jobs for spouses who aren’t in the oil trade: architecture, banking, law, policy, commerce. None of these feature in Aberdeen, where highly educated spouses are often left with no option other than to work in jobs they are over-qualified for. There would be a flood of young petro-technical professionals to the first operator that moved their technical offices to Edinburgh. I myself would be on the first bandwagon to town, no matter which operator.”
David B.: I enjoyed your column featuring the letter from our colleague in California. I fear that your call for responses will give rise mainly to spirited defenses or denunciations of Houston as a place. While that does promise to be entertaining, I want to try to get past the somewhat inflammatory rhetoric that our colleague used, and address his general point that our industry’s consolidation in Houston has led to our industry’s current dilemma: a demographic hole, a lost generation.
I think that probably the biggest contributor to our demographic hole was simply the health of our industry – middling-to-poor – over the last two-and-a-half decades or so, (the last few years excepted). We laid off so many, so many left for greener pastures in other industries, and fewer young people saw such an industry as a good bet for their futures.
But we have to at least consider that factors beyond the health of the industry led to this hole, and I believe that our consolidation in Houston, is at least a contributor. It certainly has been for me: I schooled at Berkeley and at Stanford (petroleum engineering), graduating in 1990. Then, there were still plenty of opportunities in California: Chevron, Unocal, BP, to name a few of the majors, and indeed I took a job at Chevron’s venerable Oil Field Research Center in La Habra, California. There, literally in my first week, I was met with a new round of layoffs (luckily, I was “too new” to be hit), and the ever-present rumors that we’d be shut down and moved to Houston (which ultimately did happen, although Chevron does continue some upstream research in San Ramon). I had had enough exposure to the industry to already be prepared for the cyclic nature of the oil business, but I was not prepared for the realization that the vast majority of career tracks were all being pulled into Houston. For me, this was enough for me to pursue seriously a couple of forays out of the oil business (which is no trivial matter when one is effectively giving up the effort of about 10 years of undergraduate and graduate study to start anew in another field!). For me, truly, only a serendipitous chance as part of a start-up kept me in the industry. I very easily could have been part of that demographic hole in our industry.
The bottom line: there are plenty of people who love living in Houston. There are plenty who don’t really care where they live and work. But there are plenty who simply will not live in Houston – and if our industry is spending all of this time hand-wringing over our large demographic hole, we have to realize that our geographic consolidation a single region is indeed a part of the equation. I can’t think of any other industry, or technical discipline, where geographic choice is so limited. Over the last 25 years, how many trained people did we lose, and how many younger people specifically chose other fields, because of the limited geographical opportunity in our industry?
Have something to add? Email Don at dons@pennwell.com.
