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While working as a Petroleum Engineer, does the fluctuation in the market value of gas and crude oil affect your pay?

As the market changes every day, does it accumulate to a certain point where you get paid less or more based on the market?

career engineering spring26 salary superstar_rock oil-and-gas petroleum-engineering
Thank you comment icon Hello Gino, Your inquiry has gone through my weekly mail. You are like a mentor for me, and Connections matter as much as skills. Reach out to Career Village as often as possible if you’re curious about. A short message asking for advice can open doors. Yes, the fluctuation of the market value of the gas can have an effect on employees who are working directly with the gas - they can benefit less from the goods of the company. This is what I think about what happening in Albania (Southeastern Europe). I am an accountant but I have never worked in an oil gas company. So not much information. Hope it helps. Blessing. Isida Mici
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William’s Answer

Hi Gino,
This is a very interesting question. I'll try to share my experiences with regards to what happens in practice.
Generally, businesses set targets using key performance measures - often expressed in the form of Key Performance Indicators (KPIs) each financial year. Such measures include sales volume, revenue generation (top line),operating profit (bottom line), reliability, quality, human resources, corporate governance, cost, risk management, sustainable development (health, safety and environment),share value etc. Targets are then sufficiently stretched to form the basis for bonus schemes.
Employees generally receive guaranteed pay (basic pay) and variable pay (bonuses, fringe benefits,share options etc.).
Variable costs are influenced by pricing of inputs, operational excellence (yield losses, usages, rejects/defects etc.).
Fixed costs (pay costs, maintenance costs, travel costs, other operating costs) are optimized by operational excellence. Higher efficiencies mean higher throughputs per unit time, meaning fixed costs are spread over more output units.
Variability in performance usually directly affects variable pay (negatively or positively).
Pricing policy determines how much price increments of inputs can be tolerated - beyond this threshold, additional costs are moved to the customer.
The ability of the market to accommodate price increases is not without limit. Beyond a certain limit, sales start to drop. This can initially result in cost cutting measures in less essential areas, reductions in variable pay etc. In severe cases, downsizing is done to contain the spiraling of costs. In the event that a business becomes insolvent (bankrupt), it's placed under receivership so it's assets can be liquidated to pay creditors.
I hope this sheds some light on your query.
Best of luck in your studies.
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