Wednesday, July 16, 2008

Sympathy For The Diesel - A Love Letter To (Most Of) The People In Oil And Gas

A recent article in The Globe And Mail attempts to explain the peculiar mood among the people of the oil and gas industry in Calgary. Despite record oil prices and record profits, there is an unusual mood of unease among the individuals working in the industry.

Unfortunately, I think an otherwise thoughtful and well-written piece has mostly missed the point. The usual concerns that make the Business section of a newspaper are all there: will prices hold? Is now a good time to make an acquisition? Do we expand, or stand pat? Will there be new regulatory concerns? And so on.

I believe there's another reason for the frowns and worry lines crossing the faces of oil and gas people here in Calgary. The same article, written for the Lifestyles section of the paper, would have an entirely different spin. Yes, there is a dark mood brewing among the people who work in the petrochemical business here. I've seen this mood a lot, having recently had the chance to work among a large number of Calgary's oil and gas people. And, for the most part, I don't believe any of it is directly caused by any of the above stated reasons.

Even in a relatively open and democratic company structure, decisions about company strategy are not usually the concern of most employees. For every one high-level decision maker, there are many engineers and secretaries and assistants and accountants and receptionists and so on. They are in the majority, and I believe their general mood is slowly filtering upwards, as opposed to the usual "boss has a bad day, everyone has a bad day" dynamic.

And why is this? Not only are the underlings the ones who have to struggle with three dollar loaves of bread, expensive gasoline, and ever-dimming public opinion . The main reason is entirely simple, and I can demonstrate it to you in four simple steps:

1) Find someone who is an employee of an oil and gas company. Start a conversation with this: "So... how long have you been working in oil and gas?" Your test subject will then answer with "(X number of) years."

2) Refer to the following handy table, showing the change in price per barrel since back in the day:


Since 20 years ago: +580%
15 years ago: +400%
10 years ago: +360%
5 years ago: +370%
4 years ago: +380%
3 years ago: +210%
2 years ago: +185%
1 years ago: +140%

3) Ask your friend/neighbor/acquaintance: "So, in X years of work, has your income increased by Y, just like the price of the commodity you work with?"

(Trust me, the answer will be "no." Anyone in oil and gas who is in a position to say "yes" isn't going to be getting involved in a personal conversation with riff-raff like you or me.)

4) Then ask: "And during that X number of years, do you find you've been working harder, or less hard at your job?"

(The answer here is almost certainly going to be "harder.")

5) Pause thoughtfully... perhaps rubbing your chin in a scholarly manner... and say something like: "Hmmm. In a free market, SOMEONE must be getting rich off of what you do. I guess it isn't you though. How does that make you feel?"

Now, sit back and enjoy the show as the truth of the matter... whether the person you are talking to has consciously thought of it in these terms or not... bubbles to the surface like Jed Clampett's Texas Tea.

Of course the world needs energy. The problem is petro-power is not the energy being most egregiously wasted here. There is a source of energy more powerful (and less exploited) in Alberta that could change things for the better. Here: Public Image Ltd. wrote a song about it back in the 80s... when oil was 20 bucks a barrel...

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