Last month I posted something about what companies need to to do to prepare for the upturn in the oil and gas sector. It generated more interest than probably any post I have submitted in the past and probably with good reason. So I thought I should return to the topic with a deeper dive on the points that were raised by the post, beginning with the concern that safety seems to suffer as we go into an upswing. As always, if you are concerned about any of this and need help making sure your safety and training programs are where they need to be, please contact us at email@example.com or by calling (985) 789-0577.
New Federal statistics show that in 2015, oil and gas injuries fell to their lowest level in at least a dozen years. That is great news, but a little perspective is important. The downturn has cost more than 80,000 jobs and the number of drilling rigs was also at its lowest rate in at least a dozen years. Less work equals less opportunity for injuries.
But look at the activity that is going on and there is reason for concern. The Denver Post recently published a series on safety in the oil patch and reporters looked at fatalities per rig. They found that, on a per rig basis, Colorado had its second highest fatality rate in a decade in 2014, about one death for every 12 rigs.
Now we are entering what industry hopes is a recovery. While the rig count is still way down by historical standards and fell slightly this week, it had risen for 17 straight weeks. Shale players are starting to map out how they will bring on line the 5,000 or so drilled but uncompleted wells in the U.S. The supply/demand curve is starting to tilt toward the demand side, at least for 2017. There are even anecdotal reports of companies having a hard time finding experienced field hands in places like Pennsylvania.
The trouble is that history tells us the upswing can be a difficult time for safety, especially when the downturn has been as sustained as this one has been. In this case, the increase in prices is likely to be modest and cost control will be very critical. The main goal for companies will be to maximize revenue while still holding down expenses. Crews work longer hours, managers take on more responsibility and the focus is on getting the job done.
We talked about this phenomenon of accidents increasing during the upturns in a blog last year, pointing out:
There seems to be a good deal of evidence that the problems come when we get back to work. That was the finding of a 2011 study done for the Centers for Disease Control. It looked at business cycles and industrial incidents and concluded that the construction, manufacturing, and mining industries tended to see incidents go up during the upswings.
There is fairly strong evidence that, relative to this trend, the frequency of workers’ compensation claims per hour worked tends to decline in recessions and increase in times of economic recovery. Some possible explanations are that during recessions:
- There are fewer inexperienced workers;
- The least safe equipment is taken out of use;
- The pace of work is slower;
- Workers fearing job loss may defer filing claims; and
- Hazardous industries experience the largest decline in employment.
But during the recovery, what happens?
- We hire new, possibly inexperienced workers (and research shows us workers are 46% more likely to be injured in the first year on the job);
- We pull the old equipment out of mothballs; and
- We work more overtime and longer hours.
In future posts, I will look at what companies should do now to avoid the potential for injuries as the work comes back. For now, let me leave you will the best advice ever delivered in a TV show: