A study in 2008 about the collapse of the auto industry in America said the disaster would cost as many as 3 million jobs. The research from the Center for Automotive Research (CAR) covered only those jobs that would be lost in the United States. The effects of the Great Recession on the car industry worldwide certainly would have been larger. The same sort of analysis can be applied to the effects of $50 oil.
The U.S. government saved the American car industry, at least in part, and the 3 million jobs were not lost. The CAR analysis was based on what would happen to car company workers and those at suppliers and local businesses throughout the rest of the economy that relied on the spending of car workers. However, even with the bailout, the restructuring of Detroit destroyed hundreds of thousands of jobs, many via direct layoffs by the Big Three.
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Recently, Bloomberg put together numbers that showed low oil prices have already caused the loss of 100,000 jobs within the industry worldwide. The figure is based only on the people who work directly within the sector, which includes those at oil services companies Baker Hughes Inc. (NYSE: BHI), Halliburton Co. (NYSE: HAL) and Schlumberger Ltd. (NYSE: SLB). These companies have the cash flow and balance sheets to support their workforces during a prolonged downturn in oil prices. However, they have decided not to. How many other jobs were lost at suppliers and other companies that are supported by the industry and its workers?
The number of jobs being lost in North Dakota, Texas and Oklahoma already has stretched into the thousands. Many of these companies that have fired workers are too small for data to be collected easily. Also, it is hard, if not impossible, to get information on layoffs in nations that rely on oil as a large part of their gross domestic product, such as Mexico, Venezuela and countries around the Middle East. It is even harder to calculate lost jobs at suppliers.
A million jobs? Within the oil industry and those segments it supports worldwide, the number is already in the six figures, and oil has only hovered near $50 since late last year.
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