Oil and natural gas prices are volatile. Changes in those prices drives changes in employment and wages for workers in jobs related to exploration, development and production (EDP). Because of the danger in some EDP jobs, these workers may be plaintiffs in personal injury and wrongful death cases. Computing damages for loss of earning capacity or loss of support requires projecting future wages from EDP jobs. When estimating base wages and wage growth rates to project post-injury wages, failing to control for oil and natural gas price volatility can lead to inaccurate projections.
RPC’s white paper presents historical data on oil and natural gas prices, rig counts, employment and wages between 2000 and 2022. It then explains a method an economist should use to estimate post-injury wages and wage growth rates. The method applies to injured workers in jobs related to EDP activity. The method uses earnings over ten or more years to control for volatility in wages and unemployment. The method calculates wage growth rates from peak to peak or from trough to trough.
Dr. Brian Piper authored RPC’s white paper on estimating base wages and wage growth rates for workers in the oil and natural gas industries. Dr. Piper is an economist who has been accepted as an expert witness in personal injury and other economic damages cases.