Southwestern Energy, the third-largest natural gas producer in the United States, U.S has announced that it will cut its workforce by 44 per cent or 1,100. The company has a total of about 2,500 employees, from which it has said it will layoff the number owing to the fact that the company has to deal with the drop in oil prices.
The firm said that it has had no drilling rigs in operation since the beginning of the year, and that it also expects drilling activity to decline in 2016. A statement by its spokesman said the remaining workers would work on the company’s wells, pipelines and other operations, PennEnergy reported. Southwestern Energy claims that the job cuts will save it between $150 and $175 million annually. The organization says it expects the layoffs to be completed by the end of the first quarter.
Prices have continued to remain on the downward trend and about 38 percent of natural gas prices has come down some 27 percent from a year ago. This has also resulted in thousands of job-cuts in the energy sector over the past year. Falling oil prices often affect activity and inflation by shifting aggregate demand and supply and triggering policy responses. On the supply side, lower oil prices lead to a decline in the cost of production. According to the World Bank, a supply-driven 45 percent oil price decline (as expected, on an annual average basis, between 2014 and 2015) could be associated with an increase in world GDP of between 0.7 to 0.8 per cent in the medium-term within the global economy as a whole.
“Historically, oil price swings and inflation have been positively correlated, even though this relationship has varied widely across countries. Large increases in oil prices during the past 40 years were often followed by episodes of high inflation in many countries,” the report on the World Bank website said.