Chevron Announces Plans to Layoff Twenty Percent of Its Workforce by 2026

What Happened?

Chevron announced this week plans to cut its total global workforce by between fifteen and twenty percent by 2026.

“Chevron is taking action to simplify our organizational structure, execute faster and more effectively, and position the company for stronger long-term competitiveness,” Mark Nelson, vice chairman of Chevron, announced in a recent statement. 

The company also told workers they could accept buyouts through May 2025, according to Reuters. Since Chevron employs approximately forty-thousand people worldwide, a cut of twenty percent would equal eight thousand people. 

Why it Matters

According to Reuters, Chevrons oil and gas reserves have fallen to their lowest point in over a decade. In the United States, Chevron, the second largest oil producer in the country, employs seven thousand people in Houston and another four thousand in California. 

Company spokesman did not indicate where the planned layoffs would occur but Houston and the area around San Ramon California would likely see the most people effected.

Chevron’s recent attempted acquisition of Hess has stalled while Chevron itself is in the midst of an ongoing court battle with Exxon Mobil. Though the Federal Trade Commission approved the merger with Hess, an ongoing arbitration has prevented the deal from becoming finalized. 

The issue there involves a dispute over assets off the coast of Guyana. Closing the deal with Hess would help Chevron boost its oil and gas reserves by giving it control of those untapped resources.

An ongoing legal dispute between Chevron and Exxon Mobil, the largest oil company in the United States, could determine who gets control of an estimated trillion dollars’ worth of oil and gas reserves off the coast of Guyana. In August of 2024 arbitrators said they would need at least a year to settle the dispute, which so far has not been resolved. 

The battle to control such large reserves of oil and gas could signal a shift by major energy companies away from more investments in clean energy.

As Bloomberg pointed out, major oil companies are now “coalescing around a common climate strategy: make sure gas and crude can be produced as cheaply as possible to withstand whatever price swings the energy transition brings.” 

Such a significant workforce reduction by Chevron coming in concert with legal battles against competitors could indicate that Chevron executives do not expect a favorable outcome. Or they are simply hedging their bets in case they don’t succeed in court.  

Alternatively, the forced reductions could simply be the result of Chevron’s improved capacity to produce more with fewer people due to new technology and drilling techniques.

How it Affects You

Oil production in the United States has increased by over fifty percent since 2014. Yet the number of rigs and people employed in the oil industry has decreased over the same time period. 

Chevron CEO Mike Wirth suggested as much in public comments recently “Through optimized pad and drilling designs and completion improvements like triple frac, we’re able to achieve these production levels with 40% fewer company-operated rigs than our plans included just a few years ago.”