Jobs for new graduates were plentiful, so I had my pick of job offers. Before I left campus, I had heard about salary compression in which employees with a year or two of service had lower salaries than new recruits. When I reported to work, I was surprised to find that the next most junior professional in my group had 20 years with the company. Sound familiar? No, I'm not describing the current oil boom, but rather the situation in late 1978.

According to the US Bureau of Labor Statistics (BLS), "Between 1978 and 1982 - the year in which industry employment peaked - the oil and gas extraction industry grew 65%, creating 279,000 jobs, while employment in the economy as a whole remained flat." (www.bls.gov/oco/cg/cgs005.htm)

In that boom, oil price peaked in 1981, declined gradually through 1985 and plummeted in early 1986. The BLS reports the industry sustained, "an extended period of downsizing and restructuring, losing more than 415,000 jobs from 1982 to 1999."

During my 21 years with the employer I joined in 1978, there was always a non-uniform age distribution. With the collapse of the oil boom in 1986, hiring was almost non-existent. A double-humped age distribution developed. People approaching retirement learned to wait for the next package. Gradually, the upper hump of the age distribution moved out of the system and people under age 35 became scarce. Hiring was not significantly increased because of retirements.

Hiring does not follow the age distribution of employees. Hiring follows industry activity, which follows the oil price. Prediction of hiring trends is difficult because oil price predictions are notoriously inaccurate.

You might say that even during austerity periods of low oil prices and low activity, companies should set aside funds to hire and train people. However, people are the ultimate just-in-time commodity. They cannot be put on a shelf to be used just when needed.

Beginning in the late 1980s senior management was concerned about the lack of young people entering the industry. However, in the face of relentless cost reduction efforts and age discrimination laws, hiring was insufficient to stop the gradual climb in average age in the industry.

Now, once again Hubbert's disciples are predicting a future of escalating oil prices. But, don't forget those old bumper stickers that said, "Give me one more boom, I promise not to waste it this time."

With high oil prices and surging activity, companies are now feverishly hiring new graduates. However, universities cannot respond overnight to increased demand. This is illustrated by records of the number of petroleum engineers graduating with BS degrees in the United States. An average of 341 BS petroleum engineering degrees were granted between 1968 and 1976 to students who entered college before oil prices began rising in 1974. The number of graduates began rising 4 years after oil prices started increasing and peaked in 1983 (2 years after the oil price peak). Between 1982 and 1987, while jobs were disappearing, so students couldn't get jobs, the average number of graduates was 1,350. Finally, from 1991 to 2003 the number of graduates settled down to about 270 a year.

The law of supply and demand was not repealed by Hubbert.

When oil prices trend downward, hiring will also slack off. We should be cautious about urging universities to expand petroleum engineering enrollment. During booms we should hire people with good technical skills from other engineering and science disciplines and provide intensive post-employment training. The oil industry can be a great place to work, but it is still cyclical. Let's not waste this boom.

Eve Sprunt, evesprunt@aol.com, is an oil industry executive.