Labor's Risk in Energy

Perspective is needed to make smart decisions about investments.  The last post “Perspective on Energy” on October 10, 2017, took a high altitude view on the energy sector in the U.S., ranking the various power sources by total annual production.   The ascendancy of the renewable power technologies and the decline of the dirtiest fuel sources is clear in a comparison of the current power production mix compared to just a decade earlier.

The shift in power sources is having an impact on the U.S. economy not just in terms of reducing pollution.  There are also changes in labor demand, leaving some communities short on opportunities and other short on qualified people. 

Vital Part of U.S. Economy. 

Over 60% of the jobs in the mining and extraction sectors are working on fuels used in energy production.  That amounted to about 468,000 workers in the first quarter of 2016.  The energy sector is also important for the wholesale trade, distribution and transport sector.  As many as 2.6 million workers, mostly in distribution and transport functions, support electric power generation. 

The energy industry is not insignificant for the construction industry.  At least 10% of construction jobs are focused on power generation facilities.  About 250,000 jobs are supporting power plants using conventional fuels.  At significant as that figure might be, a more impressive construction employment opportunity is in the renewable sector.  Over 391,000 construction jobs have been created by the renewable energy industry, with structure-dependent solar power leading the way.

Jobs in Energy Production

In 2016, the electric power generation industry employed about 1.9 million people.  Most work in oil or gas where over a half million workers are kept busy at bringing oil of the ground and natural gas companies employ another 310,000.  However, almost as many  -   750,000 workers  -  have become involved in renewable energy such as solar, wind, geothermal, biofuels, and nuclear.  The solar industry alone has put close to 374,000 people to work and wind has hired nearly another 102,000. 

EMPLOYMENT BY ENERGY SOURCE
Power Source	Generation	Fuel	Total
Solar	373,807		373,807
Wind	101,738		101,738
Geothermal	5,768		5,768
Hydro	65,454		65,545

Bioenergy	26,014	104,663	130,677
Nuclear	68,176	8,595	76,771

Coal	86,035	74,084	160,119
Natural Gas	52,125	309,993	362,118
Petroleum	12,840	502,678	515,518
Other Fossil Fuels	68,811	82,736	151,547
Source:  U.S. Department of Labor Statistics

Jobs Worth Protecting

Policy decisions aimed at preserving employment in the fossil fuel industry, specifically in the coal industry, are targeting a very small part of the U.S. economy.  Nonetheless, those jobs are important in the communities that host coal mining and processing plants.  The jobs are important because often coal miner positions are the only opportunity available except for the occasional job at a fast food restaurant or as a retail store cashier.  The paycheck comes with a catch.  Injury and illness rates in the coal sector are dramatically higher than in other industries, running as higher as 4.7 incidents in some mines per year per 100 full time workers.  This compares to 1.1 incidents in per year per 100 workers.  (U.S. Bureau of Labor Statistics, 2010)  Injury rates alone have been declining.  According to the U.S. Department of Labor, injury rates had reached an all-time low near 2.0 incidents per year per 100 workers.  Of course, workers in the renewable energy industry are free of injury risk.  For example, in the solar industry workers are exposed to a variety of hazards such as arc flashes, electric shock, falls and thermal burns.

The International Atomic Energy Administration put the risk in power sources in perspective through man-day lost per unit of energy output.  However, they did not stop at time lost by workers.  The IAEA also looked at the general public, assessing the risk posed by both the production and the use of each energy source. 

MAN-DAYS LOST PER UNIT ENERGY OUTPUT
Power Source	On the Job	Community
Coal	73	2,010
Oil	18	1,920
Nuclear	8.7	1.4
Natural Gas	5.9	-0-
Wind	282	539
Solar, Photovoltaic	188	511
Biofuel, Methanol	1,270	0.4
Source:  International Atomic Energy Administration

Apparently, not only workers need protection from job loss.   Workers also need protection from dangerous jobs and the community needs protection from energy sources that leave them so debilitated they miss work as well.  This is certainly an important consideration for investors  -  is your capital doing harm in your community by supporting the labor's riskiest sectors?

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.