The Full Ramifications of Cost-Cutting
A question to be considered, the potential cost to be calculated. With headcount reductions remaining high on the agenda, the ongoing trend for cost-cutting raises questions around unintended consequences?
Like many sectors, the oil and gas industry is still weathering the storm caused by the COVID-19 pandemic. Compounding the issue, businesses across upstream, midstream, and downstream are in a state of broader transition, responding to the global shift to renewable energy and facing an increasing need to address carbon neutrality expectations.
The acute financial pressures faced last year may have eased somewhat, with the recent OPEC+ announcements and the predicted impact of the vaccine rollouts pushing prices above $60 a barrel for the first time since late 2019. However, headcount reductions remain high on the agenda as companies look to increase their margins and recoup the historic losses they incurred in 2020. This ongoing trend for cost-cutting raises questions around unintended consequences and the potential to impact how businesses maintain agility, operational performance, and preparedness standards with a reduced workforce and lower investment levels.
In terms of oil spill response, twelve months from the outbreak of COVID-19, OSRL has seen the number of oil spills decrease in line with the reduction in oil demand. To many, it would therefore seem that the overall risk profile should have also reduced. Unfortunately, risk simply doesn’t work like that.