Nov. 8--Houston's energy economy has clearly felt the sting of an unprecedented drop in crude and natural gas prices, with more than 18,000 jobs lost in past months.

But recent downsizing moves by Royal Dutch Shell, ConocoPhillips and other oil and gas companies appear to go beyond the typical bottom-of-the-cycle belt tightening.

They suggest a permanent shift toward doing more with less -- in what could be a troubling trend for Houston.

"The oil and gas industry in the Houston area has probably seen its peak in terms of, if you want to call it, its glory years," Allen Brooks, managing director at Parks Paton Hoepfl and Brown, a Houston investment bank that invests in the energy sector.

Last month, Shell said by year end it would cut 5,000 employees, or 10 percent of its global workforce, under a sweeping reorganization. ConocoPhillips -- after cutting 4 percent of its workforce this year -- is putting $10 billion in assets on the block to pay debts. BP, meanwhile, has cut more than 5,000 jobs worldwide under an ongoing turnaround, and major oil field services firms like Schlumberger and Halliburton have eliminated thousands more jobs this year.

While not all the job losses have been in Houston, the moves highlight a growing emphasis on getting lean to compete in a world where the costs and challenges of accessing new oil and gas reserves are rising each year.

"The discussion that's being had is, 'Is being big bad?' Does that put you in a disadvantage competitively?," said Bob Fryklund, vice president with IHS-Cambridge Energy Research Associates in Houston.

That discussion re-emerged last month, when James Mulva, CEO of Houston-based ConocoPhillips, questioned whether the large, integrated business model that has prevailed for decades among western oil companies is still the best way forward.

But Irving-based oil major Exxon Mobil has disputed the idea, as have other observers who say restructuring programs launched by ConocoPhillips and others stem more from issues at those companies than from broader industry challenges and that their impact may be overstated.

"In my opinion, it's just Wall Street window dressing," said Barton Smith, director of the University of Houston's Institute for Regional Forecasting.

Bull's-eye on Houston?

The short-term impact, however, is real. Houston's upstream oil and gas industry -- consisting of exploration and production, oil field services and equipment manufacturing -- lost 13,800 jobs in the 12 months ending September 2009. Local employment now stands at 244,100, Smith said.