The slowdown in drilling has provided oil companies with time to go over their operations, and the amount of losses due to thefts in both oil and equipment they are discovering is staggering.
Oil theft is nothing new in the U.S. It has been around from the time the first oilfields sprang up in East Texas at the start of last century. However, amid growing unemployment in the sector, the thefts are gathering pace.
Oil barrels stolen from around the drilling wells go for around $10 a barrel on the black market, which is about four times lower than the normal price, and it is not only oil getting stolen, as equipment and vehicles often also go missing.
Unemployment the Facilitator
The increase in thefts can be directly linked to the growing number of workers losing their jobs as the industry goes through its worse slowdown in decades. During the last year, claims for unemployment insurance from the energy sector went up to around 110,000, more than double the previous year. The layoffs have hit all personnel, including security guards who were making sure the sites were protected from thefts. Without the guards, the sites are virtually unprotected and ripe for the picking.
Losses, which had already reached a staggering $1 billion in 2013, are far higher this year and have dragged wages down in the process. Weekly pay for the Bakken oil patch fell by close to 10% during the first quarter of this year. To make the situation even worse, in Texas the theft of oil has become entwined with Mexican drug trafficking as thefts from the Eagle Ford Shale region, currently the biggest production area for the state, leans on what are known to be traditional routes for smuggling. The cartels involvement makes the situation even more concerning for companies, as it is harder to locate and track stolen goods once they are across the border.