The Bureau of Labor statistics has released its workplace fatalities in U.S. workplaces for 2014. While the overall number of worker fatalities edged up by about two percent, deaths in the category known as oil and gas extraction jumped by 27%. Jump was from 112 in 2013 to 142 in 2014. This has a number of implications:
Balancing Budgets and Safety – The reality of the collapse in oil prices is that companies need to cut costs anywhere they can. Safety can be an appealing target; it is a cost center and it is hard at times to determine how some safety expenses translate directly to reductions in incidents. It is tempting to reduce the safety staff, audits or training. But the new fatality numbers are a clear indication that this is no time to cut too deeply in the safety department. No one wants to explain to an investigator why they chose to cut corners right before a serious incident.
The answer is not to find cost-effective safety solutions. If you need help with compliance or in applying cost-effective approaches, contact us at Lifeline Strategies.
Enforcement and Regulation – Anyone who wonders why OSHA and other agencies are focusing their attention on oil and gas needs only to look at the fatality numbers. No government agency involved in safety can ignore an increase from one industry of that magnitude, but when the agency is as aggressive about addressing workplace incidents as the current OSHA leadership, the industry will find itself in a spotlight. Oil and gas has seen stepped up inspections and high profile fines. Just last week the National Institute for Occupational Safety and Health (NIOSH) announced a three year study of oilfield safety. The key point is that the increased attention is warranted in the minds of regulators and, until industry finds a way to address fatalities, the regulators are not going away.
The Oil Slowdown and Fatalities – Given the cutback in activity, man-hours worked should plummet for 2015. Theoretically, fewer hours worked will mean less opportunistic risk and fewer fatalities. The indication so far has been that, as companies layoff workers, the experience and skill-level of the remaining workforce is pretty high (see article about this here) and there does not seem to be a drop off in safety. The problem is that, if fatalities go down a moderate amount and hours worked go down a lot, the fatality rate based on man-hours could jump up. That means an improvement may still look bad on paper. We might expect fatalities to shift from drilling-related activities(which is dropping) to production-related activities (which has increased in some cases as operators try to squeeze out more production).
Smaller Players Will Be Under More Scrutiny – The building blocks of improved safety haven’t changed – training, following safety rules under supervision, contractor oversight, etc. Small operators do not have the resources of larger operators and, working under slim margins, may cut corners. Many of the incidents in the last year have involved smaller service companies and that is well understood by OSHA.
A final note – The 2014 stats also focus attention on contractors involved in fatal accidents. OSHA has had a big push in recent months to clamp down on contractor incidents, including policy changes, speeches and regulatory changes. According to the figures from BLS, contractor deaths increased from 749 deaths in 2013 to 797 deaths in 2014. The statistics also say that 19 percent of contractors who died were working for the government, second only to the percentage working for the construction industry. So the question is, if OSHA is so serious about protecting contractors, what is it doing to protect government contractors?