What Americans pay for gasoline gets lots of attention, but the price at the pump is only one oil industry indicator that has been rising lately. The starting salaries of bachelor's degree-holding petroleum engineers are also at historic highs. This other price spike has gotten almost no coverage even though labor market experts believe it seriously undermines the prevailing narrative about America's technical workforce.
That narrative asserts that the nation has a shortage of scientists and engineers caused by inadequate school systems that can't produce enough excellent math, engineering and science students. Exhibit A for this argument is the generally low percentage of American students and the high percentage of foreign students in many of the nation's engineering programs.
The evidence, as Miller-McCune magazine pointed out last year in a July cover story, indicates the opposite. The U.S. produces a large supply of able math and science students. What keeps their numbers low in many engineering programs is not a lack of ability but a lack of desirable career opportunities after they graduate. But opportunity is bubbling in the oil patch. Rising crude oil prices inspired both more exploration and more use of new and expensive extraction technologies, for example from tar sands. This coincides with retirement of the large generation of petroleum engineers who built the Trans-Alaskan Pipeline and expanded exploration in the 1970s. Since 2002, the Bureau of Labor Statistics has gone from forecasting declining demand for petroleum engineers to a 2010 prediction of 18 percent greater demand over the coming decade.
In recent years, the upward spurt in new petroleum engineers' starting salaries reflects these trends. From an "already high $43,674 in 1997," average bachelor's degree starting salaries leapt to $86,220 in 2010, write Hal Salzman of Rutgers University and Leonard Lynn of Case Western Reserve University in a paper presented to the Association for Public Policy Analysis and Management.
In response, the number of Americans graduating with bachelor's degrees in petroleum engineering more than doubled since 2003, even as the number of Americans earning petroleum engineering master's degrees lagged. Because "most industry demand is at the Bachelor's level," Salzman and Lynn believe that today's new graduates are mirroring the choices made by the computer graduates of the 1990s dot-com boom, who flocked to industry's enticing opportunities rather than to graduate school.
As demand and pay have risen, so have both the number and percentage of Americans in petroleum engineering programs. "At the Bachelor's level, the number and percent of total graduates who are on student visas dropped to the lowest proportion of total graduates in the last 15 years," write Salzman and Lynn.
The notion that the U.S. can't produce enough "students with the qualifications to become engineers in response to demonstrated demand [is] ill-founded," they conclude. Not only are the science and math skills of America's best students increasing, they state, but those students' ability to spot and respond to real career opportunities remains as sharp as ever.