Monday, August 27, 2018

Oil Boom a Bust for Blacks
In an industry promising a path to the middle and upper classes, the jobs are not going to African-Americans.

By Alan Neuhauser Staff Writer
Aug. 24, 2018, at 6:00 a.m.
U.S. News & World Report

SINCE OIL BEGAN TO FLOW from the first successful well in the U.S. in 1859, the American oil and gas industry has promoted itself as an egalitarian engine of the country's economy, a driver not only of industry and innovation but a path to financial security for almost anyone, regardless of background, who is willing to put in the work.

As fracking and horizontal drilling in the last decade transformed the U.S. into the world's largest oil and gas producer, it's become a selling point verging on the mythic: The Walmart cashier from Bismarck or Midland or Tulsa suddenly drawing a six-figure salary and driving a gleaming white pickup truck, the engineer or chemist now making three times that of his grad school peers by working in the petroleum sector.

For African-Americans, however, it's a path to upward mobility filled with hurdles.

In spite of well-publicized diversity campaigns and outreach efforts by the industry's largest companies and trade groups, black and African-American workers last year held only 9 percent of the jobs in oil and gas extraction, according to the Labor Department. Through the boom of the past decade, blacks never made up more than a tenth of the country's oil and gas workforce, and an analysis last year found they continue to be paid on average 23 percent less than their white counterparts.

Oil and gas is far from the only industry where black workers account for just a fraction of the workforce: In fact, as recently as 2015 blacks held a larger share of oil and gas jobs than in fields as diverse as law, the social sciences, arts and entertainment, architecture, the physical sciences and the life sciences, according to Census data. The U.S. across the board has seen strikingly little progress in reducing hiring discrimination or shrinking employment and pay gaps between black and white workers.

But there are elements that make oil and gas unique:

Unlike, say, law or finance or even most chemical or engineering firms, the oil and gas sector lobbies hard for tax breaks and environmental exemptions that affect taxpayers' wallets and health, often on the premise that by offering such exemptions, communities will in turn benefit from local jobs. And while there are certainly other sectors of the economy that push for similar subsidies – tech giants, for example, or professional sports teams – few produce the pollution of the oil and gas sector.

A history of building refineries and other industrial sites in communities of color has ensured that minorities continue to bear a disproportionate burden from the sector's impacts. An EPA study this spring found race – not poverty – is the biggest predictor of exposure to certain air pollution from the oil industry.

Laborers, whether in mining or manufacturing or construction, have long sacrificed their bodies and their health for a wage. But when it comes to oil and gas, the trade-off between allowing – or even encouraging through tax breaks – an oil, gas or petrochemical facility to be built in exchange for jobs, it turns out, is no trade-off at all.

"I hear people in this industry talk about how this industry can move people into the middle class, but that's never going to happen if we're not talking about this stuff," says Paula Glover, president of the American Association of Blacks in Energy.

As benchmark oil prices stabilized this year after a crash in 2016 and more rigs and jobs have returned, U.S. News & World Report spoke with close to a dozen African-American roughnecks, engineers, students, professors, university presidents and professional groups to find out why the oil and gas industry remains effectively closed to African-Americans.

They pointed to hostile climates on the job and hiring trends stretching back more than a century, recruitment drives that inherently focus on white workers and outreach that continues to shun the largest pools of black engineering talent.

The result is that in a U.S. labor market upended by automation and the gig economy, the oil and gas industry – seen by many as one of the last reliable roads to the middle and upper class – remains effectively off-limits to the communities most in need of the economic opportunity it purports to promise.

More Jobs, No Changes

The American Petroleum Institute, the lobbying colossus that represents all facets of the oil and gas industry, has regularly touted its commitment to diversity in promoting the industry.

Jobs are its key selling point. And in reports and remarks, the organization has contended that oil and gas offer the opportunity that communities of color and low-income communities have so long called for, combining both a seemingly low barrier of entry with reliable work and high wages.

"Our energy renaissance has created unprecedented opportunities for Americans of all backgrounds," Jack Gerard, API's then-president and CEO, said in February 2016 in support of a House bill aimed at encouraging the hiring of more women and people of color.

Hiring within the oil and gas industry by that point had surged more than 20 percent from 2008 to 2015, buoyed by the production boom unleashed by hydraulic fracturing and horizontal drilling.

Two months before Gerard's remarks, the industry closed out 2015 with monthly average employment of 193,400 workers, slightly off the 10-year peak of 197,500 workers hit the previous year, according to Labor Department data. And though supervisors or experienced specialists were the ones mostly pulling the six-figure incomes that news outlets reported – and industry champions promoted – workers in the field were still averaging about $63,000 a year, according to federal data – thousands of dollars more than a national median income that still hovered in the $50,000s, let alone what can be earned in most retail or entry-level service jobs.

"These are careers that will pay well above the national average. Expanding education and workforce training programs will help ensure competitive access to these great job opportunities in underrepresented communities," Gerard said.

Benchmark oil prices crashed that month, spurring mass layoffs. More than two years on, hiring has only recently recovered, and it is still not near the level it was in 2015, with companies having achieved greater efficiencies during the downturn.

However, in a March 2016 report commissioned and still cited by API, researchers from the consulting firm IHS Markit concluded that the good times would eventually continue – as long as government stayed out of the way: Another 1.9 million new jobs in the oil, gas and petrochemical industries would be created between 2015 and 2035 under a low-regulation "pro-development" scenario, it predicted.

Moreover, nearly 40 percent of the new jobs would go to African-American and Hispanic workers, results that "speak to the continuing importance of these industries in the U.S. economy as a whole and to individuals and families looking for well-paying career opportunities," the report found.

Yet it glossed over a major caveat:

While the number of jobs overall were expected to rise, the share of African-Americans in the oil and gas workforce wouldn't crack the current rate of 7 percent, according to data in the report. Latinos, it found, would receive a rising share of jobs as the community constituted a larger and larger portion of the U.S. population overall through the next 20 years. But over the same period, the oil and gas industry's biggest champion effectively – if silently – concluded that virtually nothing would change for the sector's black workers.

"Growth itself isn't going to do it," says Donald Tomaskovic-Devey, of the University of Massachusetts, who has studied hiring in oil and gas. "The money's pouring in and you're just scrambling to keep up while you're in this growth mode – that leads to less reflective management. Growth alone has no effect."

And there was more: While IHS and API's researchers found that as many as 131,000 new jobs would go to African-Americans under the best-case "pro-development" scenario, only about 15 percent of those jobs would be in lucrative "skilled blue collar" and "semi-skilled blue collar" roles – jobs such as electrician, welder, roustabout or equipment operator. The plurality – at least a fifth – would be in lower-paying service positions like accounting, where black workers already make up a larger share of the oil and gas workforce.

An API spokesman, in a lengthy statement to U.S. News, said that diversity in the industry "remains a core interest."

"The natural gas and oil industry has focused on outreach to communities of color over the past few years, specifically working on programs to diversify our workforce, starting with education," Reid Porter said.

Asked why the percentage of black workers in the industry isn't expected to change in the next 15-20 years, he replied, "We have invested in studying this issue as well as taking actions that include strategic partnerships, and recruitment."

IHS Markit declined to make one of the report's authors, Richard Fullenbaum, available for comment. Fullenbaum's coauthor, James Gillula, retired last year.

"1 in 100"

In spite of diversity campaigns and outreach efforts by the industry’s largest companies and trade groups, black and African-American workers last year held only 9 percent of the jobs in oil and gas extraction, according to the Labor Department.(MARK RALSTON/AFP/GETTY IMAGES)

Geography, of course, plays a uniquely significant role in the oil and gas industry – and, by extension, who the industry hires. Today's energy boom – the one that's allowed the U.S. to become the world's biggest exporter of oil and gas and, soon, to export more crude oil than it imports for the first time since 1953 – is tied to a series of shale rock formations spread beneath the U.S.

There are the Bakken Shale in western North Dakota, the Anadarko Basin in Oklahoma and the Permian Basin in West Texas, for example, each embodying the popular image of the U.S. energy renaissance: a boom based in rural communities along the central spine of America, areas that also happen to be bracingly isolated and overwhelmingly white.

Such locations pose a challenge when it comes to coaxing most any young American to the oil and gas trade. But they present particular issues in recruiting black workers.

"It's not uncommon in a lot of these areas to see people with Confederate flags and things of that nature," says Tosa Nehikhuere, a well engineer for Shell who worked on oil rigs in rural Texas during internships as an engineering student at the University of Texas at Austin. "For a black person working in that environment, a lot of times it can be very uncomfortable because they obviously don't fit in with that culture."

Or, more succinctly: "Very few people want to be 1 of 50 or 1 of 100," says Jeffery Wallace, who was involved in recruiting for Shell from 2001-2005.

But those are not the only boom spots. Drillers have also flocked to the Eagle Ford Shale near Houston and the Marcellus Shale around Pittsburgh – cities where more than a quarter of residents are black. And there's Louisiana, long home to refineries and petrochemical plants and other downstream industries, where more than a third of the state's population is African-American.

Yet even in these regions, and especially in low-income communities that are often located closest to such industrial sites, hiring of African-Americans has lagged.

"The narrative is that these are well-paying jobs and these are family-sustainable jobs that the economy of Pennsylvania needs," says Jamil Bey, president of UrbanKind Institute, an economic and social justice think tank in Pittsburgh, a region that's recently become a hub of the oil and natural gas boom. "The reality is that long-term residents who have been the victims of this environmental injustice for all of this time, they're not getting the jobs that would provide the wages that would allow them to move away from those facilities."

Michael Ash, a professor of economics and public policy at the University of Massachusetts, Amherst, has studied the trade-off between a community allowing a company to build a new refinery or oil rig or compressor station, and the jobs that such facilities then provide.

The results found virtually no exchange whatsoever: Almost all the benefits flow to the companies, while few jobs went to the communities, which also see greater rates of asthma, heart disease and other impacts associated with air pollution.

And with such facilities often being cited in communities of color, his analysis found, "there's a very disproportionate burden shared by African-Americans, and the jobs – not."

"I expected that if you have local decision-makers making really good decisions, you would have had some of the good coming along with the bad," Ash says. "The total number of jobs and the total pollution burden – the complete disconnect between those really did come as a shock. There was no sign of, 'Sure, you accept these bads, along come some good jobs.'"

Some of the reasons are situational: In Pennsylvania, for example, oil and gas firms raced to ramp up development ahead of an expected new state tax on oil and gas wells, hiring experienced workers from out of state – places such as Oklahoma and North Dakota – rather than investing in large-scale development of the local workforce, according to community advocates.

"Those were the people who were ready to work, who had the skills, who knew what they were doing in that industry," Bey says. "The community college developed some new courses in tandem with some of these companies but not at a scale that's really going to move the needle."

Others, though, are more structural: Explicitly racist hiring practices that were common to the U.S. labor market through the first part of the 20th century, combined with segregated housing policies that further isolated African-Americans from economic opportunity, helped create an overwhelmingly white workforce – including in the oil and gas industry.

Scholars say that in cases when blacks were hired, they were commonly relegated to the most hazardous jobs, such as cleaning chemical tanks with no protective gear, while higher-paying roles were reserved for whites. And in the boom-and-bust cycle of the oil and gas industry, minorities were often the first out the door.

Such policies have been outlawed. But companies haven't gained much ground in the intervening decades in closing the hiring gap – largely because the makeup of the workforces became self-perpetuating, as employees and human resources departments recruit from the networks they know: universities and friends and family, which are in turn mostly white.

"When wages are really high, there's an incentive for people to hire people like themselves – there's the attractiveness of the job, something worth hoarding," Tomaskovic-Devey, of the University of Massachusetts, says. "'The right fit,' 'the right people skills,' usually means 'people like us.'"

Wallace says he saw this mindset firsthand. While this outlook by companies might not be malicious, he says, it nonetheless reflects "an abundance of the familiar."

"For many years they've been successful, and they've been successful with the people that look like the people that are doing the hiring. It's a systemic barrier," Wallace says.

As a result, black communities – even those who are living in the shadow of drill rigs or refineries near Houston or Pittsburgh or in Louisiana and experiencing higher rates of asthma, heart disease and other impacts associated with the pollution produced by such facilities – remain left out. That's had its own cascading effect, reinforcing the image of who "belongs" in the industry.

"If you don't see individuals who look like you or talk like you or are your gender, that negatively reinforces the notion that, hey, this industry is not for you," says Ronald Marlow, vice president for workforce development for the National Urban League and former Massachusetts undersecretary for workforce development.

The consequences can also be explicit: DeVonte Haggerty, who grew up around the oil and gas industry in Texas, took a job last December as an equipment operator with Schlumberger, one of the nation's largest oil firms. But he left after only four months on the job after, he says, he was ostracized by coworkers for exhibiting what was seen as too much ambition.

"I don't want to make it a race thing. Everybody throws the race card around like it's candy – you don't want to talk about it, but it does need to be talked about," says Haggerty, who now works for Union Pacific Railroad. "The more you know as a black person, the more it seems that someone is walking on eggshells or they're getting sketchy about something – you knowing too much, them worrying about what you were doing."

Such anecdotes, taken one by one, might be easy to dismiss – that they were one-off events, for example, or perhaps merely misunderstood. But other black workers in oil and gas who spoke with U.S. News offered their own versions of Haggerty's story, from experiences they felt amounted to direct discrimination to interactions that, if not overtly antagonistic, contributed to the atmosphere of a work environment that's hostile to workers of color:

There were the ubiquitous comments and jokes aimed at blacks and Latinos, the supervisor on one oil rig who demanded that its only black female worker make him coffee every morning, the white coworker on another rig who, in the wake of the fatal police shooting of Michael Brown in Ferguson, Missouri, in 2014, said unprompted, "If they would stop acting out, they wouldn't experience these things."

Some black workers found such experiences easier to ignore.

"It causes some sense of awkward moments of people who you think, 'I thought that was a good guy,' and then you come up with different notions about people," an African-American worker told U.S. News, asking not to be named to avoid jeopardizing his role as a production engineer in Midland, Texas. "But a lot of times, I try not to let that stuff affect me. Because what am I here to do? I'm here to do work and go home."

Others, though, such as Faith Carter, who works in petroleum engineering in Houston, found the experiences deeply painful. She recalled abruptly breaking into tears during dinner after her first job on a rig, shocking her mother, who had worked in the energy industry.

"She said, 'I can't believe that you experienced what I experienced in the '80s. Everything was supposed to be different.' It was a shock for her," Carter says of her mother's reaction. "No one should feel empowered enough to do the types of things that were done. Even if it is an isolated occurrence, it's not an isolated mindset."

Such experiences have a ripple effect, adding to perceptions that the industry is unwelcoming to black workers, deterring others from deciding to pursue a career in oil and gas.

"Stories of discrimination live beyond a shelf life," Marlow says. "Once you hear an industry has a history of discriminating, it makes you less inclined to go down that path."

Shortcomings in STEM Support

Oil and gas firms have, with some justification, contended that they've sponsored or even directly created programs designed to overcome such hurdles. Many have come in the guise of STEM programs – initiatives to boost students' science, technology, engineering and math skills, drum up enthusiasm for careers in STEM, and shrink the broad chasm between the white men who make up the bulk of students and STEM graduates and everyone else.

Such efforts, though, have so far met with little success. The most recent U.S. News/Raytheon STEM Index from 2016, which tracked interest, enrollment and achievement in STEM tests, degrees and industries, found that racial gaps had remained firmly entrenched since 2000 and, in some cases, even widened.

"The positive growth in STEM occupations and the United States' lagging performance in STEM degree attainment highlight the fact that this issue is bigger than any one industry," Porter, the API spokesman, said in his statement to U.S. News.

In the past year or two, the American Association of Blacks in Energy, the main advocate for African-Americans in the oil and gas sector, has started to come to terms with why that might be, at least in lower-income communities:

In neighborhoods that are chronically underserved, beset by violence, or burdened by intergenerational poverty or trauma, the association has realized, a STEM curriculum can only go so far.

"If you're not reading at grade level, it doesn't matter what your STEM program is doing – there's no way for them to learn the material," Glover, of the American Association of Blacks in Energy, says. "We as an organization are starting to talk about social contacts and social impacts around diversity far more than we ever did."

Glover says she and her organization have begun pitching oil and gas executives – and local politicians trying to woo the industry's business – on the need to find new approaches that reach deeper and offer more support for black workers. What exactly those programs might look like, and to what extent corporations should be responsible for footing the bill, remains far from clear. But the new effort so far has received "at least a polite reception" she says.

"Whether or not that spurs enough interest to do something different, I don't know," Glover says. "I don't know that anyone has heard that and that's been their aha moment."

Meanwhile, spreading even basic awareness about the industry in such communities, where few if any residents work in the oil and gas industry, and the closest facilities might be dozens or hundreds of miles away, remains a deep-set challenge.

"If you have absolutely no knowledge of it," Wallace says, "if you have absolutely no understanding of how this can transition to a good life, it's very difficult to look at that particular situation and say, 'OK, this is a viable opportunity.'"

Academically Eligible

Working as a roughneck or roustabout in the oil field is one of two main paths into the industry. The other is as a highly trained engineer.

But even within that supposed meritocracy – one ostensibly defined by grit and academic achievement – black students and graduates contend that they are routinely neglected by the industry.

Nehikhuere, the well engineer at Shell, spent four years completing an engineering degree at the University of Texas at Austin, where he landed two coveted internships with XTO Energy and Marathon Oil, led a range of student organizations and graduated with a 3.54 GPA.

As one of only two black students in his class in the engineering program at UT, he'd long known that he would be a minority in an industry overwhelmingly dominated by white men. Nearing graduation last year, however, one job application after another was rejected or disappeared into the ether. At career fairs, he felt recruiters seemed uninterested.

"I kept getting rejected, rejected, rejected. And I didn't understand it at first," Nehikhuere says.

As classmates started landing jobs while others kept hitting a wall, he says he began to notice that "a lot of these companies, they hire people who look like them, people who fit into that culture."

He began to believe that "a lot of these fell back to my race." Even if he wasn't exactly being "singled out," he says, he felt "discouraged by the lack of diversity in many of the companies" he interacted with.

"If I were white, I would've had an easier time 'fitting in' with a lot of different companies versus the experience that I had," Nehikhuere says.

Other black engineering graduates reached similar conclusions. One recent African-American graduate, who received a dual degree from Louisiana State University and Xavier University of Louisiana, landed competitive internships and published a research paper in a scientific journal, watched as white classmates whom she had tutored landed jobs in the industry while her job applications seemingly languished. She eventually gave up the search entirely, instead accepting what was initially a lower-paying position as a chemical engineer.

"They have a certain profile," she says of the recruiters she met. "It seems like they're looking for a certain kind of person: They have the high GPA, they have all these clubs, they have lighter skin. They just, I guess, don't look like me."

Oil and gas firms do tend to focus much of their recruiting efforts on schools such as Stanford, Rice, the University of Texas, Texas A&M and the Colorado School of Mines, scholars, professors and recruiters say. They are undoubtedly top-flight universities, boasting prestigious engineering programs that regularly stand at the top of the U.S. News & World Report rankings. But – as in Nehikuere's experience at UT – those engineering programs are also overwhelmingly white.

"I completely understand the business rationale that we need a pool to draw from, but there are [other] pools that exist," Wallace, the former recruiter for Shell, says. "The question is what are you doing with those existing pools?"

Those pools can be found in the engineering programs at historically black colleges or universities, he contends, from institutions such as Howard University in the nation's capital, to others in the heart of oil country: Prairie View A&M University or Texas Southern University outside Houston, or Xavier in its dual-degree program with Louisiana State University. Students, graduates, professors and alumni, however, say they routinely feel all but ignored.

"It amazes me how people go, 'We've never heard of you,' even when I think, two or three years ago, The New York Times wrote about us," Xavier President Reynold Verret says. "We send more black students to graduate programs in the sciences than any other school in the country."

The lack of attention from oil and gas companies – whether intentional or not – is the result, Verret says, of "the same presuppositions that underlie American prejudice for the last 100 years, the issue that we find in educating STEM students in general: the expectation that those students aren't ready."

It is true that HBCUs such as Xavier and Prairie View have had to implement summer on-ramps and other support programs that help prepare high school graduates for the academic rigors and freedoms of college. As many as a quarter of Xavier's incoming freshmen each year, for example, arrive in need of intensive remedial help for reading or math.

"We meet them there and address those deficiencies," Verret says. "Our experience tells us that they have talent and ability, but they maybe never learned to read or write, never learned the mathematics required to take that advanced mathematics class."

By the time students graduate, though, they've completed a full course load aimed at preparing them for a job in the oil and gas workforce. Many have already gained work experience in the industry: Xavier, in particular, emphasizes the importance of internships so students can both begin to build their networks and burnish their resumes.

All the while, many of those same students have had to overcome poverty, trauma and their own experiences with discrimination. The oil and gas firms doing the hiring, though, have historically undervalued qualities like drive and self-determination that can come from such experience, Wallace says.

"Dynamics like, 'This person worked their way through school,' or, 'That person was the first to go to college,' those are not necessarily looked at as attributes that speak to future success," Wallace says. "That's where you get into – with some companies – a real hypocrisy: They indicate that they want to bring on a diverse workforce, but at the same time, there are certain perceptions, certain stereotypes, an inclination to look at things like the professors in the curriculum or the prestige of a certain school versus the actual students themselves."

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