(The Center Square) – The Texas oil and gas industry in July reported another month of job losses in the upstream sector. 

The upstream sector includes oil and natural gas extraction and related support activities. It excludes refining, petrochemicals, pipelines, and equipment manufacturing, which support hundreds of thousands of additional jobs in Texas.

Texas’ upstream employment was higher last month than it was in January but job losses over the last four months point to a weakening trend, according to an analysis of the data by the Texas Independent Producers and Royalty Owners Association. 

The sector reported 1,200 job losses over the month in July, according to the latest labor data. This includes 300 jobs lost in extraction and 900 in the service sector, according to the data. 

In June, the industry reported 900 job losses in extraction; in May, 300 jobs lost in the upstream sector. In April, the upstream sector reported the most job losses this year of 1,300, The Center Square reported. 

Employment in the industry “rose from 192,400 jobs in January to a peak of 197,300 in May, then declined for two consecutive months to 195,800 in July, a drop of 1,500 jobs,” TIPRO notes. 

Compared to January data, upstream employment is still up 3,400 jobs, or 1.8%, for the year. But June and July losses of 300 and 1,200 jobs, respectively, mark “the first back-to-back monthly declines of the year,” it says.

“Month-to-month fluctuation of this kind is common in upstream employment data over the course of a year, and this period has been no exception, with declines in three of the six monthly changes recorded so far, including the 900-job drop in February and the 1,200-job drop in July, the steepest monthly decline of the year,” it says. “With upstream employment now down in back-to-back months for the first time in 2026, the two-month pullback raises the question of whether the spring hiring surge has run its course amid elevated but volatile oil prices connected to the ongoing U.S.-Iran conflict, or whether it reflects a shorter-term pause before renewed growth.”

TIPRO advocates for the latter, pointing to continued strength in upstream job postings as a signal that employment growth will resume.

Texas leads the U.S. with the most jobs in the industry, followed by Pennsylvania, California, Ohio and New York. Nationwide, there were nearly 70,000 available jobs in the industry last month. 

The most were in Texas, 10,951 unique industry jobs, with 4,363 new jobs added last month, according to the latest data. 

The greatest number of industry jobs available in Texas are in support activities, gasoline stations, petroleum refineries and pipeline transportation of natural gas. The greatest number of job postings were in Houston, Midland, Dallas and Odessa.

The job postings are consistent with other jobs available in Texas, which is leading the US in job growth, The Center Square reported. 

Another good sign, industry experts note, is that rig counts are up. According to the latest Baker Hughes rig count, as of August 21, they were up by 50 nationwide. Rig counts were also up in Canada by 36 and internationally by 17, according to the data. 

Despite this, Texas oil and gas producers are facing “real constraints,” TIPRO President Ed Longanecker said. At the federal level, “tariffs on steel and other critical materials are elevating the cost of every well. Federal permitting delays and a growing list of state regulatory requirements continue to test investment timelines.”

At the state level, “Texas also needs more energy infrastructure to move product to market, more dispatchable power generation and expanded electricity and transmission capacity into the oil and gas producing regions of the state,” he said. 

Additionally, “Available U.S. refining capacity remains exceptionally tight relative to demand, limiting the country’s ability to fully convert domestic crude into the fuels consumers and businesses need.” One key solution is “durable permitting reform at the federal level and practical, workable rules at the state level,” he said, which are “essential to recognize the scale of Texas production and the capital intensity of modern operations.” 

Despite these challenges, Texas producers continue to deliver. According to U.S. Energy Information Administration data, natural gas production is projected to break new output records. In its August 2026 Short-Term Energy Outlook, the EIA forecasts U.S. marketed natural gas production averaging 122.5 billion cubic feet per day (Bcf/d) this year – surpassing the previous record of 118.5 Bcf/d set last year. 

The growth is largely being driven in the Permian Basin in far west Texas and southeastern New Mexico. Permian natural gas production is expected to average 29.2 Bcf/d this year, 6% more than last year. U.S. crude oil production is expected to reach 13.8 million b/d this year, before increasing to 14.2 million b/d next year, according to the EIA.