The future price of oil is back in the news, this time with a new twist.
Seeking Alpha posted an article yesterday quoting Continental’s Harold Hamm:
“(U.S. oil production) is going to have to be done in a measured way, or else we kill the market.”
I’ve had a sneaking suspicion we were headed this way for quite some time. I feared the moment prices started to rebound, we would ramp up production so fast we would essentially kill the recovery. It looks I might be right, which (surprisingly) isn’t the first time – more on this in a minute.
In short, here’s my hot take on the future price of oil:
$45 – $55/bbl is the new normal, but don’t be surprised if it’s far lower for far longer.
Between America’s ability to turn ramp-up shale production at the drop of a dime, our inability to take a “measured” approach to drilling, and the proliferation of shale technology around the world, we are looking at a global oversupply as far as the eye can see.
The good news is oil prices are irrelevant. Still, you’re probably wondering…
James, you’re just a digital marketer and a damn good one at that, but a digital marketer none-the-less; what the hell do you know about the future price of oil?
Armchair Analyst on the Future Price of Oil
I knew the oil market was in a massive bubble that was set the burst the moment I hired into the industry in 2010. No, I’m not a genius. I lived through the mortgage meltdown of 2008 in Detroit, Michigan. Living through that taught me two things:
- If it looks like a bubble, acts like a bubble, and smells like a bubble, it’s about to burst… and much sooner than you think.
- It doesn’t matter when bubbles burst. Your success or failure has nothing to do with oil prices, only your actions determine that.
I know that sounds crazy, but here me out. When the meltdown hit in July 2008, my sales numbers suffered and it wasn’t long before I was looking for another sales job. At the same time, several my friends who were top mortgage bankers in 2008 are still top mortgage bankers today.
What was the difference between them and me? Why did I fail and why did they succeed? It all comes down to one critical factor — my philosophy. I let the crisis destroy my belief system, while my friends kept making calls and closing deals. My faulty philosophy cost me another job. I decided to never let that happen again.
Technology Adoption Life Cycle
I founded Tribe Rocket Inc. January 1st, 2014. The average crude spot price back then was $102.10. I knew that would not last for long. Again, I’m not a genius. Life experience taught me that bubble was about to burst, and when it did my success or failure would have nothing to do with the price of oil.
In short, I came to believe, “Success is not about a commodity, it’s about your philosophy.”
Some would say I was naive, even stupid. If you know a market is going to crash, starting a business that only serves that market doesn’t seem like a wise move. Others questioned my sanity and encouraged me to expand outside of oil and gas to survive and grow.
But, I had a new philosophy based on a long-term vision. Success wouldn’t come overnight, or even in the first few years. The digital marketing genie was out of the bottle. Only a small handful of Bleeding Edge Adopters got it back then. But, if the Innovation Adoption Lifecycle model is right (and it always is), it was only a matter of time until the technology spread.
Once oil prices crashed, it wouldn’t matter. By that time, enough companies would either adopt digital marketing technology or the market would contract and force adoption the remaining players.
That’s exactly what happened. In 2014, the oil and gas industry was so far to the left on the chart, we didn’t even register yet. Counterintuitively, when oil prices crashed it accelerated adoption. With more people retiring it forced the “great crew change” faster than anyone expected. It also forced companies to find more efficient ways to acquire new customers. They realized if they didn’t adopt they wouldn’t be around much longer.
Don’t get me wrong, we have yet to hit the Early Adopters phase and the Late Majority is still a long way off. But it’s exhilarating to watch the industry move along this path. Working with the early Innovators that do digital marketing in the oilfield is a privilege that fires me up every day. Regardless of the future price of oil, the future is looking bright!
But while Tribe Rocket Inc. has survived and is turning the corner toward profitability, hundreds of companies have come and gone. If you work out in the patch, you can probably name several services companies that sprang up recently and aren’t around anymore. Likewise, I can point to dozens of digital oilfield publications and companies that were forced to close-up shop in the past few years.
The Blame Game
If you asked why they failed, I’m willing to bet not one of those companies would blame their philosophy. They might blame the economy, they might blame Obama, they might blame oil prices or the freeze in equity markets. But, the number that would blame their philosophy would probably be roughly zero.
Yet, as Mr. Jim Rohn often said, “Your personal philosophy is the greatest determining factor in how your life works out.”
If you want to crush it no matter what happens to the future price of oil, work on your philosophy. Create a long-term vision, relentlessly execute to achieve that vision, and don’t let the whims of the market dictate your success.
Failures blame markets and become a flash in the pan. Successful people take full responsibility and become legends.