We’ve seen it before: “Please Lord, just give me one more boom, and I promise not to mess it up this time.” It’s funny on a bumper sticker, but is it possible? Can we not only weather the cycles but also perhaps use them to our advantage?
Unfortunately, I cannot promise any easy-fix answers or get-rich-quick schemes. Rather than profess convenient or inconvenient truths, I will simply examine various – mostly US – data trends that are directly or loosely related to the oil and gas industry. Such diverse data include oil and natural gas price, rig count, wells drilled, producing wells, production rate, energy consumption, reserves, summer and winter peak temperatures, resource estimates (and forecasts), private and government investment in energy research, population demographics, GDP, inflation, stock indices, employment, and college enrollments, to name a few. Some of the relationships that can be observed in these data are fascinating and exhibit a range of cyclic, rhythmic, but unfortunately, not often usefully predictable behaviors. However, a general knowledge of related trends can prepare us to manage our teams, departments, and businesses and be proactive when the early signs of trend change occur.
Cycles and the volatility that results represent opportunity for those who accept change and manage it well. Although change is not always expected, it is change that keeps things fresh and offers new opportunities for differentiation. An unchanging world would not only be boring, it would also eliminate our ability to grow and improve. Change is good!
Dr. Scott W. Tinker is Director of the Bureau of Economic Geology, the State Geologist of Texas, Director of the Advanced Energy Consortium, and a Professor holding the Allday Endowed Chair in the Jackson School of Geosciences at the University of Texas at Austin. He is Past President of the American Association of Petroleum Geologists (’08-’09) and the Association of American State Geologists (’06-’07).
