September 18, 2021

Time to Get Real

Letter from the Publisher

For the better part of 18 months our industry has been reeling from the complete tank (no pun intended) in the price of oil. All you could hear at the beginning were confident quotes like “Just wait it’ll be back to 100 soon.” “Back to 70 by the end of the year.” and “50 was the bottom.” But recently that has changed (and rightfully so) to timid questions like “Was 26 the bottom?” (who would have thought we’d see 26 a year ago) “Will we see the teens?” and “How long will it be this cheap?” It seems like there’s a widespread case of denial going on. Most likely we’ll be lower for a while. Maybe we won’t but the fundamentals say we will, and for the sake of this note let’s imagine they will. Like for the next five years. Now take a deep breath and imagine how our industry could succeed in that business environment. Imagine how you and your business could succeed in that environment. What adjustments would you have to make? What tough decisions would be inevitable? When weaker businesses are driven out of the marketplace, will you be capable of seeing the opportunities? What are the next breakthroughs in technology that will give us the advantage on production profit margins? The point is we’ve entered into an era of survival of the fittest. Natural selection will reign supreme for the foreseeable future. This is our reality. Accept it. Adjust. Succeed.

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