The variable profit levels inherent in the fluctuating boom and bust economic cycle of the oil and gas industry often lead to spikes of layoffs and bankruptcy filings by companies who find themselves in debt when the “bust” hits. This familiar occurrence was seen again last fall when oil prices fell dramatically and gasoline cost less than $2.00 per gallon at most U.S. gas stations. Workers of companies considering bankruptcy experience significant uncertainty about the future of their positions. Layoffs often occur in exploration and production, including roughnecks, drillers, roustabouts, surveyors, and drafters. The oilfield employees who work these physically demanding jobs closest to the wellhead are those that companies cut first to save money in tight economic times. Workers who are let go often end up filing for personal bankruptcy protection themselves as a result of the industry downturn.
Another circumstance arising from oilfield companies filing for bankruptcy is that civil lawsuits involving those companies are put on hold (or “stayed”) pending the outcome of the bankruptcy proceedings. When employees or others are injured in oil fields like the Bakken in North Dakota, a civil lawsuit may be the only way those injured people can hold companies accountable for their negligent or reckless behavior that caused the injuries. If the company is liable for the harm caused, it will be required to compensate the injured party. However, in some circumstances filing for bankruptcy may allow a company responsible for causing a catastrophic injury to a worker to avoid or delay paying for the damage it caused to that person. Where an oilfield or trucking accident has left a severely injured worker with substantial medical costs, or worse, has resulted in the death of a family member, this delay can be devastating to the people who rely on the court system to vindicate their rights.