The COVID-19 pandemic spared no industry when sweeping closures and other government restrictions blindsided professionals on every level. Despite having some turbulent-proof characteristics, the oil and gas industry was impacted all the same. The global demand for crude oil dropped significantly as movement and travel greatly reduced. This initial reaction has had a kickback of negative effects as people remain wary and fearful of what could happen in the future. To make matters worse, the Russian and Saudi Arabian conflict is flooding the market, drastically reducing the market price for oil.
Although the immediate implications of this pandemic and the subsequent reactions don’t instill pipeline contractors with hope, there are still some positive moves to be made. Here are some tips for handling rocky times in the oil and gas industry.
Restructuring the Fundamentals of Financial Models
Wars, natural disasters, and other catastrophes have provided the oil market with a steady supply of shocks throughout history, but this recent pandemic was unique in that there was a disruption to both supply and demand simultaneously. Right away, companies with large oil and gas pipelines were trying to reduce their expenses. This required a much-needed assessment of critical metrics such as balance sheets, cash flow, loss, profits, overhead costs, and more. Too many companies have relied on an “endless growth” model. While this strategy is great for quick bursts of growth in both profits and pipeline jobs, it doesn’t perform well in turbulent times. Now is a perfect time for leaders to rethink their financial models and refocus on being flexible, agile, and dynamic. These attributes make it easier to operate through troubled markets.
Create an Adaptable Workforce
When uncertainty strikes and cost-cutting efforts are deployed, pipeline jobs are one of the first areas to receive attention. With pipeline contractors looking for quick and effective ways to reduce expenses, staffing is always in jeopardy during times of crisis. While that has initially resulted in a lot of furloughs or layoffs, oil and gas pipeline companies are now starting to rehire. Instead of jumping the gun and returning staff to its normal size, it’s important for operators to strive to create an adaptable workforce. By only hiring enough staff for the projects at hand, leaders ensure that they’re not overspending their budget or giving workers a false impression of stability. The ability to scale up or scale down depending on your immediate needs will make it easier to adapt to fluctuations in the market. With help from providers like The Pipeline Connection, piping companies will find it easier to find talent in a timely manner.
Stay Informed and Stay Positive
Although the oil and gas industry isn’t exactly booming right now, that doesn’t mean companies need to close up shop. The whole point of becoming more adaptable and flexible isn’t to ride out this wave of uncertainty forever. Instead, it’s about being able to weather these storms until the market inevitably revs back to life. While this dip is certainly unprecedented, it’s not something the industry can’t handle. In fact, by 2050, the EIA predicts that the usage of global energy will increase by 50%. The Pipeline Connection is going to have your back throughout the entire process. Contact us to learn more about how we can help.