Remember many months ago, some banks internal memo was leaked out on loans to people from the oil and gas industry? Well, before the downturn in oil prices, these oil and gas people were the ones being paid so high they could buy any of the usual luxury condos in KL. I read a long article about the oil industry a few days ago in The Star. Read it here. In brief, it said that the current retrenchments in the oil and gas industry is very bad and it is unlikely that the jobs lost will ever be back. The article gave many examples of why and they include even the fact that production of shale oil is a new phenomenon that will ensure oil prices remain low. Some oil producers however expressed confidence that when they need these people, they will be able to hire them back.
The reason why oil prices went up has always been due to the expectations of demand. You expect demand to go up higher than production and thus prices go up. It was not because of the cost of production. In other words, the costs of production could continue to go up as long as the oil prices continue to move upwards. To me, this is a little absurd. Yes, this same thing is also happening to some smartphone brands but that’s another story.
Today, let’s focus on why so many people are paid so highly in the oil and gas industry. During sudden booms, the need for people is immediate and thus everyone would be paying ever higher just to attract the same calibre of people needed by other industries. Let’s not look too far, an engineer in the oil and gas industry is definitely going to be paid much higher than the same person in the manufacturing industry. My colleague (programmer) told me that his classmate was paid nearly three times his pay when they both graduated at the same time many years ago. His friend joined a famous oil and gas brand and was RETRENCHED end of 2015. As at August 2016, his friend was still jobless.
I do hope that the crazy prices of yesterday would not return. Anyone want to pay high petrol prices in Malaysia? As for the jobs in the oil and gas, I hope they will be back soon. However, the salaries should no longer be at those premiums of yesterday. Let’s have a more normalised pay scale? Of course, if the jobs involve being stationed in oil rigs, then they should be paid premiums but look around. Many are working in safe and awesome working environments and yet being paid by far higher than everyone else. That’s the only reason why when the industry suffers a downturn, the retrenchments and closure of offices are fast and furious too. Remember, high pay means high leverage to invest and not high EXPENSES… Happy following.
written on 13 Sept 2016
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