Russia is hurting, the Middle East is moving downstream, and it turns out lower oil prices don’t make the sky fall.
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How Cheap Oil Is Squeezing Russia’s Economy
The right balance: part one
The right balance: part two
Trudeau’s plan for oil and gas
How Soon Could A Sustained Oil Price Rally Occur?
OSU Professor An ‘Optimist’ About Ethane Cracker
In Gulf of Mexico, microbes thrive above natural oil seeps
National Oilwell Varco CEO Clay Williams Sits Down With The Motley Fool
Discounting Shale Oil Would Be A Foolish Long-Term Strategy
5 Effects Low Gas Prices Are Having On Americans
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#048 Oil and Gas This Week Podcast: No, Lower Oil Prices Don’t Make the Sky Fall
Transcripts Courtesy Of
James: I’m James Hahn II.
Mark: And I’m Mark LaCour.
James: And you’re listening to the Oil and Gas This Week podcast. This is the show for busy oil pros who want to quickly keep their finger on the pulse of the industry. Here we are at Episode 48, only three weeks away from Mark LaCour getting me to do something consistently once a week for a full year.
Mark: Yeah, and folks really that is a lot of work so hats off to James for actually sticking to this.
James: Hats off to you for sticking to this with me. We’ve got some house cleaning to start with here, Mark. What are the things we need to talk about up front? Because we’ve gotten a lot of feedback and reviews in e-mail about how people are frustrated that basically they cannot see the news links through the iTunes podcast app.
Mark: Yes, I think James has a really good solution but unfortunately it only applies to iOS but we work on everything else. So what’s that solution?
James: So here’s the solution. It’s called Overcast. The Overcast podcast app, if you just go into the iTunes store on your phone, just click Apps and click Search, type in Overcast podcast, it will come right up. And the great thing about this is when you see a new show come in and you click the “I” for the information that goes along with the show, the entire blog post with all of the links is right there. And so it’s Overcast. Personally I get crazy frustrated, not being able — because what all iTunes does is just sucks in all the words and jumbles them all together.
Mark: Yes. So what a great solution and how easy is that? All you do is touch the I. So Overcast, folks.
James: Yes, Overcast for iPhone and if you’re on Android, it’s Stitcher. It’s a little work around but it’s really not that hard. Stitcher is in the Google Play store. But the really good news is, Mark.
Mark: That pretty soon, will actually be on Google Play itself.
James: Yes. Google is rolling out podcasts finally this year. Hopefully, they’ll keep them around. They really like to crush apps and so forth but we’re actually already published in there. It just has to go live. So if you’re on an Android and I know that a lot of people listen on Android and they’re frustrated with the work around with Stitcher. Good news, Google has a solution. They just haven’t actually told us exactly when yet which is a little frustrating. But sometime in 2016, we’re going to be in the Google Play store under their podcast.
Mark: What are we going to do with that one guy that’s listening to us on a Blackberry?
James: If you’re that guy, email us, tweet us. We want to hear about that. What about Windows Phones? There are probably plenty of people on Windows Phones out there too so they must have to use Stitcher or something. I don’t even know what’s Windows.
Mark: You’re back from the Windows Phones because you know that’s very prevalent. When these phones are very prevalent oil and gas in Europe, they love their Windows Phones. So we would love to hear back from you. What’s the experience like on a Windows Phone?
James: Yes, definitely. And then also I went out there and found a way to easily set up for everyone to be able to share the show and I did it for the big three, if you will, Linkedin, Twitter and Facebook. And can you tell them, Mark, a little bit about what sharing does?
Mark: So if you share our show with your network, with the people that you follow or that follow you, it allows us to reach out to more people, allows us to grow our audience exponentially, organically. People that you’re associated with, if you enjoy our show, they will probably enjoy our show. So do us and your network a favor and share this, share this on your social networks.
James: And I got to say do yourself a favor because the social sharing function myself from the marketing perspective in terms of you building your personal brand within your company and within your industry bring a resource like this to your coworkers and to your friends, that positions you even more as that go-to guy with the with great resources and great intelligence within your company and within your niche.
Mark: Yes. You know, James, I’ve had a lot of people reach out to me I’m sure you have the same people reach out to you, just basically thanking us for putting the show together because it’s a quick way for them to stay on top of what’s going on in the oil and gas industry. So I promise you, folks, your peers would probably appreciate to listening to this is well.
James: So let me jump in here, just follow me here. So I said the big three. So it’s triberocket.com/twli. Ttriberocket.com. Whatever you’re doing if you’re on the treadmill, if you’re mowing the lawn, if you’re driving your car, don’t do this. Wait until you pull over. But you can just triberocket.com right into whatever browser you have on your phone.
Triberocket.com/twli will automatically share the show, it will automatically open up a status update to share the show on LinkedIn, and you can put whatever commentary you want with that.
And then with Twitter, it’s triberocket.com, and this one is a little easy to remember, triberocket.com/twtw, so this week, Twitter. And then it will automatically populate a tweet that says, “James Hahn II and Mark LaCour are killing it. Best oil and gas podcast out there,” with a link to our show. So that’s it. That’s if you’re on Twitter and I know not everybody in this industry is on Twitter. So triberocket.com/twtw.
And then finally Facebook and a lot of people think that not many people in this industry are on Facebook. It’s absurd how many people in this industry are on Facebook. And so we’ve got it set up where you can automatically share the show at triberocket.com/twfb, so this week Facebook.
And that, just like with LinkedIn, it will automatically pop up and you can write whatever status or whatever you want. Click Share and if you do that, we really couldn’t thank you enough for that.
Mark: Yes, folks. So reach out there. Share our show with your network. People will appreciate that you did. Help us spread the word so do it.
James: Thank you, thank you. If you do that, we will retweet if we can see it. And join the LinkedIn group, all that stuff. Our community is growing like crazy. And just thank you for listening. Thank you for listening. With that said, we’ve got a lot of stories to cover, Mark. Let’s get into it. We’ll start with Bloomberg Business in Russia, how cheap oil is squeezing Russia’s economy.
Mark: Yes. Russia relies on oil and natural gas for about 50% of its revenue. So this little crude price is hurting them so they’re running a deficit and a deficit is basically when you’re spending money that you don’t have. So it’s interesting, if you go to this Bloomberg article, they hit on some very good business drivers, right? So their currency is being weakened by inflation. Their gross domestic product is shrinking. The value of rubles decreased. And it’s all because of the low price of oil. And it’s also being amplified by the sanctions that are put on by the US and Europe.
Now, interestingly enough, I have a contact that’s actually in Russia that I do a monthly interview with, and he brought up something I had never thought of which is most of the Russian oil and gas companies get paid in US dollars which is US dollar is very strong right now internationally. But they pay their people and their suppliers and their service companies in rubles, which has been cut in half.
So if you think about that, they are actually making bigger profit because of the decline of the ruble because they’re getting paid in American dollars. Now, Bloomberg doesn’t touch on that but it would fit right in with this article.
James: Okay. I’m really trying to process that right now because sort of in America you have operators who obviously want prices to go back up. Is it sort of an opposite situation over there where they’re like, “Well, we don’t care because we’re paid in this and we get higher profits”?
Mark: Yes. So that’s a very small percentage. The country as a whole, the people of Russia want the prices to go back up. I mean imagine if 50% of your income was cut out or diminished drastically. That’s what’s happened to the country. Now, if you think about political, geopolitical, if you look at what’s been going on in Russia lately, because their income has been cut, they’re getting aggressive.
They’re getting aggressive internationally. And that’s because their people are starting to crumble, starting to have unrest. So I expect Russia to continue to be more aggressive internationally because of the low price of crude. Once the price comes back and their deficit shrinks, I think they will back off from the geopolitical aggression.
James: Do you think they need some propaganda to be able to push out to the people?
Mark: That’s part of it. Part of it also is, quite frankly, if something bad happens in the Middle East, the price of crude will come back quickly. I’ve talked to a lot of senior people in the last couple months and, without let me quote them, they all say when it’s in private, “I don’t want a war to happen. I don’t want people to die. I don’t want children to suffer. But if, for some reason, something breaks out in the Middle East between Saudi Arabia and Iraq, I know the price of crude will rebound instantly.” Unfortunately, that’s true. I’m not saying Russia’s trying to make that happen. But if it would happen, it would benefit the Russian economy.
James: There’s no chance that that would be a driver for what they might do you?
Mark: No, I mean that’s just wrong, right? And even the Russians are being a little bit more aggressive. I just don’t see them doing something that is just wrong to benefit their economy. But they are being a little bit more aggressive. I mean you see this stuff is going on in the news.
You see this stuff going on between Russia and Turkey and Russia and US and Russia and Europe and they’re just being more aggressive because their income has been slashed dramatically and just cause the geopolitical tensions.
The other part of that is I’m sure Russia would really like to see us lift the sanctions especially in this low crude market. They have a lot of recoverable normal reserves so not unconventional but the normal reserves and those are actually profitable at 30 bucks a barrel. They would love to have some of our well stimulation technology to increase that and they can’t get that with these current sanctions.
James: We talk a lot about the Middle East and specifically Saudi Arabia and how they have all these social programs and they’re dipping into their savings and if they didn’t have those social programs, it would cause a revolt maybe. How long can Russia survive with low crude prices before the people start getting really upset?
Mark: That’s a hard one to call, right? Their leadership, the people love their leadership over there. I would have thought they would have already been grumblings and rumblings and calls to change the way the political organizations go there and they just love put into debt. So that’s a really hard one for me to call.
I don’t see what would happen — we talked about the Middle East happening in Russia. I just don’t see it happen. I think the people there are buckling down. They’re making due. One of the things the Russian government — this is sounds funny but it’s true — one thing the Russian government does it heavily subsidizes vodka to make it ridiculously cheap for the people. I know it sounds so bad but it’s true, right?
James: Keep them sauced and they will be doubly happy.
Mark: Yes. Yes. So I don’t see anything like that happen over there. You’re going to see in the next ten years very big shifts in the market for oil and gas because of our ability to export, because a lot of Middle East looking to capture that market in Europe that Russia has. So Russia is going to have to find other markets and it’s probably —
I mean it’s already happened. They are already working with China to capture some of that market and also India. So I think you’ll see some changes but you won’t see any revolts in Russia. It’s not going to happen.
James: Okay. We talk about the Middle East a lot and we have — this was actually a four-part story and I didn’t want to put all four parts into this show. But all four parts got a lot of clicks on Twitter so this is obviously something people are interested in.
And so it’s from Energy Global Hydrocarbon Engineering, energyglobal.com, The Right Balance Part 1, and it’s basically looking at the balance of all kinds of things throughout the Middle East, country by country. So can you kind of walk us through this?
Mark: Yes. This is a great article, James. So this is showing country by country in Middle East. What is going on as far as the balance between consumption and production; so for instance, the consumption of gasoline or diesel in some of these countries versus how much they actually make.
It’s interesting if you go through, you can see that the Middle East and the different countries have recognized that there’s — because most in Middle East, and people may not know this, even though they produce a ton of crude oil and gas, they don’t produce a lot of refined products so they have to import gasoline, diesel, petro chemicals, and they realized that that’s a chink in their armor.
So a lot of the countries over there are frantically trying to build up a refinery capacity so that they can refine their own oil so they’re not dependent on importing it from other countries.
So we will hit a couple of things here. They talk about Bahrain where their gasoline outputs about 15,000 to 20,000 barrels per day but they use 80,000 barrels so there’s a price difference there. Iran is in the same boat. Their demand is about 40,000 barrels per day and they have almost no output. Iraq is —
James: Four hundred thousand.
Mark: Yes. That’s their demand.
Mark: Yes. And then you look at, Iraq. Iraq has probably the largest refining capacity in the Middle East, but their production of gasoline is around 80,000 barrels a day and they are using over 100,000 barrels per day. So you can see how this goes there.
Now, interesting, if you go look at Kuwait and Kuwait was the whole benefit of the US in the coalition step when they had the invasion of the Desert Storm and so that country is actually really turned itself around. So even though their demand is about 45,000 barrels per day, they’re producing 55,000 barrels per day. So they’re there on the good side of demand versus production.
So if you go through this article, part one, part two, it goes country by country. Now, what’s interesting about this, if you’re in oil and gas and you work for a company that somehow touches refining, in any way, whether you do engineering, project management, whether you make valves, pumps, whatever, this is a good article for you to go through and look at the different countries that are trying to grow their refinery capacity.
Guess what? They have a need to what you do because they’re building this sort of stuff.
Any companies out there that are looking for business, go to this article. Read it country by country. It will allow you to focus your sales and marketing efforts.
James: Some of those downstream companies that might be listening.
Mark: Well, not just downstream companies. Think about valves. Valves apply across this entire industry: upstream, midstream, and downstream. You take somebody like Forum who is one of the biggest valve manufacturers here in the US and predominantly, they’ve been an upstream focus company because that’s been the biggest demand. Well, not now, not with these little crude prices.
So someone like Forum which — and I know they’re doing this, shout out to J.J. Walker who’s the head of their sales globally — but I know they focus their efforts on downstream now and they’re doing really well as low crude price market because a valve is a valve.
James: The biggest section in part two is on Saudi Arabia. What do they say about Saudi Arabia?
Mark: Yes. So we talked about this in the past. Saudi Arabia is probably the largest refining center in the Middle East and it’s growing. It’s refining capacity like crazy because they realize the globe has a huge demand for refined products. The US is leading that. We are exporting refined products like crazy.
We’re building more capacity. We have the best most efficient refineries on the planet. We have the cheapest feedstock and the lowest transportation cross to get that feedstock to the refineries. But Saudi Arabia is close, right? They’re building this refining capacity and their output has risen 700-800,000 barrels a day of diesel, right? So they’re getting there. They’re getting ahead of that curve and it’s great to see that.
And once again, if you’re in the business that touches refining, Saudi Arabia is growing its refining capacity like crazy. And not just in Saudi Arabia. They’ve partnered all over the world to grow their refining capacity.
And the kind of cool thing they do, like such as China, is when they partner with the Chinese government or a Chinese company to build a refinery, in the contract they stipulate where that crude needs to come from. And guess where it has to come from?
James: Saudi Arabia?
Mark: Saudi Arabia. So they’re basically going out building a market that doesn’t exist for them yet and then making sure that market is supplied by their production. That is smart.
James: That is very smart. Speaking of smart, we have a very dedicated fan of the show. Big, big shout out to John Petashnick. Now, I didn’t plan on doing this on this show, Mark, but should we go ahead and announce our network?
Mark: Yes. Let’s do it.
James: Let’s do it. The back story here is that obviously we started off with this week in Oil and Gas which is now Oil and Gas This Week for the Google juice, which is working, by the way. Our show made it to number six on oil and gas podcast search so that is awesome. But we then launched Oil and Gas Careers podcast and we’re not done. We’re not nearly done. We’re going to go into video. We are going all over the place, right, Mark?
Mark: Yes. We’re growing like crazy and James and I are making sure we grow strategically, right? We’re just not going to do anything somebody wants us to do. We’re going to grow in ways that provide benefits to our audience.
So in the process of this growth, we’ve realized that this little show that we started just as a kind of funding for me and James is to turn into a piece of a huge network and what do we end up figuring out — and actually we didn’t figure this out.
James: We didn’t. We threw it out to the LinkedIn group because we needed to rename the LinkedIn group because it didn’t make any sense because we had two shows were posting in there. And you and I have been struggling with this thing for what, three weeks now.
Mark: Yes. We couldn’t come up with anything that fit.
James: That fit, and then John, under five minutes, he said, “What about World Oil and Gas Network?” And I said, “Ooh, what about Global Oil and Gas Network?” Go over to Namecheap. The URL is available. There it is – the Global Oil and Gas Network is where we’re headed. And I’m fired up, Mark.
Mark: I am too. So to all our listeners, think about this; you are the early adopters of the Global Oil and Gas Network. We’re proud of you, right? You’re the reason we’re able to do this. So John, you know what? You don’t know you’re getting this but we have some custom hot sauce that we’re putting together for the —
James: Yes. Hot sauce!
Mark: It’s not going to be easy to get. We only give it to special people for special occasions. You get the first batch. You get the first bottle.
James: First batch of Global Oil and Gas Network hot sauce. Oh, gee — what is it? Global — GOGN. Yes. So I’m super excited about everything that’s going to be going on in that. Stay tuned. We’re going to be changing the LinkedIn group name and rolling out more shows and we’ll see where this goes. We really don’t know how big it could get, Mark.
Mark: No, but we’re having fun in the process and the bottom line is we’re providing value. We will not grow this in a way that only puts money in somebody else’s pocket. The money that we make with this, with our sponsorships goes back in the show so we can produce more and higher quality content for you, our audience.
James: Yes. That’s the most important thing. We just had a conversation a couple days ago about a strategy and we’re just, “No, that’s a sellout. We’re not doing that.”
Mark: Yes. And we won’t.
James: No. No. We have only gotten here because you trust us and we’re not going to do anything to compromise that trust. So thank you for listening. Back to the articles. This next one is overwhelmingly political. And so let’s try to navigate these waters as best we can without getting too far down one side or the other. So it’s Trudeau’s plan for oil and gas. This is about Canada.
Mark: Good article, John. Thanks for sending this out. So basically the Canadian’s Government is the way they elect stuff is a little bit different than we do here in the US. They basically every ten years get tired of whoever party is in power regardless of what’s going on or not and they think, “Well, they’ve been in power for ten years.
We need something new.” So then they switch to the other side and that recently just happened in the fall of 2015 when they elected the new Liberal governor and the existing government was there for ten years, like I just said. And so the people say it’s time for a change. You can go back in history and look and see how that goes back and forth in Canada. But of course, as far as the way this affects the oil and gas industry, it’s not necessarily going to be great.
Now, nothing has been ruled out for sure but there’s been a lot of talk by the Liberal Party government about things like the environment, right? They want to go back and look at more environmental regulations for oil and gas industry. They have their own version of the Fisheries Act where they want to go back in and look and make sure the oil and gas is not damaging wildlife.
They want to go back and reexamine some of the stuff the previous government did as far as tax breaks to oil and gas industry. They want to continue the moratorium on tanker traffic on the British Columbia’s North Coast.
So how is this going to affect the oil and gas industry in Canada? It’s probably not going to be good and then unfortunately, the industry in Canada right now is really, really suffering. So I’m kind of hoping for the people of Canada that this new government looks at everything holistically not just from a political slant and understands the business and the economic benefits the oil and gas industry brings to Canada and works with the industry there. If they are going to make changes, make changes that don’t affect people’s livelihood.
James: One of the things that stand out to me is the low carbon economy trust.
Mark: Yes. I could do a whole show on this. And a lot of people know this. This is one of my pet peeves. Anytime you look at a problem, James, and you know that you and I have worked together and done this and this is what I do with my clients.
You have a bunch of problems that you can solve. But what is the biggest problem? What is the 80% issue? And that’s where you need to spend your time not on the 20% issue. When you look at global warming — basically when you look at greenhouse gases, do you know that carbon dioxide is really not that much of a greenhouse gas? Do you want to know what the biggest greenhouse gas is?
James: Tell me.
Mark: Water vapor — way, way more of a greenhouse effect than carbon dioxide. How many environmentalists do you know are out there fighting the water vapor?
James: That would be really difficult.
Mark: But it is the bigger freaking problem, right? I could tell you why they don’t fight water vapor and some will tell you that doesn’t affect water vapor. That’s not true. Think of every time you boil something. Every time you wash dishes. Every time you microwave something.
Every time a boat speeds through the water. Every time you turn on the shower. Yes. Humans have increased water vapor in the atmosphere and it’s way more of a greenhouse gas. But you never hear any environmentalist talk about that. For one reason, there’s no money involved. There’s money involved in capturing carbon. There’s not money involved in capturing water vapor.
So the new government’s two billion dollar low carbon economy trust fund in basically trying to support projects that reduce carbon, well, look at that, there’s two billion dollars right there that somebody going to make. And that’s what really drives it. I don’t want to go down the deep end but for all of our brothers and sisters in Canada, I hope the new government does things fairly and protects the prosperity that you have all enjoyed for the last 50 years in the oil and gas industry.
James: I’ll throw this in the show notes, not to go further down this. We will just transition right after this but it was on investors.com. I shared it on Facebook. Five ways we know Al Gore has been running a global warming racket. And here’s the quote: “Unless drastic measures to reduce greenhouse gases are taken within the next ten years, the world will reach a point of no return.” Al Gore, 2006.
Mark: People that listen, don’t get me wrong. Global warming itself is a fact but it’s a natural swing. What is the opposite of an ice age? Global warming. We have an ice age about every 100,000 years. It’s been about 120,000 years since we had the ice age.
So of course, we’re in a global warming phase because we’re not in the ice age phase. My big disconnect is the people out there that say men’s activity has increased the rate of global warming and there’s no proof of that — none. Anyway, let’s not go down that road. Let’s keep moving.
James: Yes. We’ve got lots of stories to get through in the next 20 minutes so let’s pick up the pace so that we could be respectful of everyone’s time. But man we could soapbox on that one for the rest of the day.
I hate talking about oil prices, you know that, Mark, because I don’t focus on oil prices. I focus on where I’m headed. I think our success in this endeavor is a good example that there’s still plenty of money to be made in this industry by innovative thinking. We have to talk about it though so oilprice.com. How soon could a sustain oil rally occur?
Mark: Yes. Great article by David Yager. Basically, if you go through this, he’s talking about how the news is reporting things that make it look like this low crude price of arms could be here forever and it’s not true. It’s going to rebound which we’ve been talking about that forever. In my history in this industry, about every ten years we have an adjustment.
We have a little crude price period of time. It happened in the ’82, ’83 timeframe. It happened in ’91, ’92. It’s happening now, 2015. It will happen again in 2025, ’26, whatever. It just happens.
We think oil could bounce back to $6 a barrel by August. If something happens in the Middle East, it will bounce back much quicker, much higher. If you go through this article, David is basically saying the same thing; that the markets are going to adjust themselves that the oversupply is shrinking and that will be back to decent prices soon. So don’t freak out.
James: Yes. Just hang in there. We are going to get there. Over to Seeking Alpha, discounting shale oil would be a foolish long-term strategy.
Mark: Yes, it’s funny about Seeking Alpha. I either love their articles or don’t like it. There’s never article where it’s like, “That’s okay.” So I actually love this article. It is basically talking about how you can’t crush it all. You think about it, James. When price get too low, people just quit going to production.
That damn well is still there, right? The ability to drill new wells is still there. When the price comes back, it just light it back up. And that’s what he’s saying here. It’s that you can’t discount shale because it’s so easy now that we have the technology down and have it down to science to ramp up. So when the price comes back you’ll see it ramp up.
The other thing it brings up is what a lot of people don’t realize is the Shell phenomena is a US thing, right? But the geology and the ability to get oil off the ground using hydraulic fracking is a global thing. So what happens as this technology and the science spreads around the rest of the world?
Like I told you, like I’ve talked about in our 2016 predictions, we’re in a hydrocarbon abundant world and we will continue to be in a hydrocarbon abundant world. Yes, we’ll have place for fluctuations. That’s part of being a commodity. But a great article about how you just can’t discount Shell.
James: One of the things that really struck me when I got into the industry and started to really understand how things worked is the historic recovery rate versus what you can do with shale in terms of gut instinct versus science.
Mark: Yes. One of the reasons that the technology has not spread is a lot of what makes a fracked well productive is in people’s heads. It’s still a science but it looks like it’s an art. Literally, that driller is looking at the rock fragments that are coming up. He knows when he’s in the pay zone, right? He can just tell. They can actually smell it sometimes. Now, there’s a bunch of companies out there frantically digitizing that, figuring out algorithms so that it doesn’t have to be in somebody’s head. And so the science is developing after the art was there. And once the science is down, then you can take that and replicate it all over the world.
James: Yes and big data is going to help that. We have some conversations coming up with some point five episodes on all that fun stuff. OSU professor and optimist about ethane cracker up in Ohio.
Mark: Great story. So this is a professor at Ohio State University in Belmont County. There’s 5.7 billion. Now, people listen to me. That’s a B, 5.7 billion dollar project, that’s one ethylene cracker. And there are hundreds of them going up.
And he’s basically talking about how just the construction phase of this could bring jobs not just in their local area but up to 600 mile radius. So he’s saying that hotels within 600 mile radius will benefit from this ethylene cracker because these workers need a place to stay and he’s right.
When you have this type of construction project going up, it benefits the local economy but it also benefits a very wide swath through the industry because a lot of these skilled workers come in for this project, make good money and then leave and go on to the next one.
But the local economy benefits because the skilled workers need a place to stay, right? They need fuel for their trucks, they need clothes, they need groceries, whatever. So just once again it’s showing how the oil and gas should bring prosperity to not just where the plant itself is being built but to a large part of that part of the country.
James: Yes, really good stuff and more good stuff in terms of taking a positive look at five effects low gas prices are having on Americans from The Daily Caller.
Mark: Great article, right? You and I have talked about this kind off and on pieces of this but this is the first I’ve ever seen it all in one place. So one of the first things they took out is the poor people in the US get the most benefits. I’ve never thought about that but it’s true. So somebody like you and me, James, saving $3 or $4 per tank for filling up is really not a huge deal.
James: I mean my tank costs a $1.50 fill up right now.
Mark: That’s right. You’re on a scooter. So for somebody like me, saving a few dollars per tank is not that big a deal. Somebody that literally lives paycheck to paycheck and is struggling to feed his family, that extra three, five, ten, twenty dollars a week, that’s good money. So the poor people in US get the biggest benefit from these low gas prices.
And then the next thing they talk about everything will be cheaper and they are true. Transportation cost is cheaper which then trickles through the economy so that gallon of bleach you buy at Walmart is a little bit cheaper because it costs Walmart a bit less to get it shipped to the store.
It also slows down inflation. Cheap gasoline and diesel slow the rate of inflation which is also good for people that are in the poor side of the economic range because they can buy more. Then it all starts, it’s easier to save money. You have extra cash because you are not spending it on fuel. So then you can save it and I was wrong for my predictions I think 2014.
James: Fourteen. Yes.
Mark: Yes. When I said that this would cause an economic boom in the US because people would spin this money, the savings, and I was wrong.
James: It was ’15, yes, because I had you on the show for those, on the old show for those. It was 2015. Sorry.
Mark: And I was wrong about that. What happened is, yes, Americans had that extra money but instead of spending it like I thought, they saved it, they paid off debt which is actually better. I just didn’t expect the US population to do that.
James: Why would you?
Mark: But once again the last data we looked at, it’s looking like an average American household save anywhere between $700 and $1,000 a year because of these low gas prices. That’s significant money especially if you’re saving that.
And then airline, the travel is cheaper because the cost of fuel was cheaper. The cost of jet fuels went down. I predicted we get a price for airline tickets and your actually start to see that right now in certain routes where there’s some strict local competition
James: On Southwest going out to Houston Hobby, you can get anywhere for cheap on the 6:00 or 7:00 flights. It’s crazy.
Mark: James, you can jump on a Southwest flight from San Francisco to Vegas for $67 round trip. I mean, that’s crazy cheap. When the price was $100 a barrel, that’s a $300 dollar ticket. And then finally, we talked about this a little bit earlier but Russia will come more assertive.
The Russian’s foreign policy has become more aggressive because the low crude prices are hurting Russia’s economy. So great article showed the five benefits of the low crude prices that nobody wants to talk about, nobody has talked about and it’s all one place. Good job.
James: Yes. I like it. I like it a lot because we’re always trying — that’s what I love about this show is that we’re not the — what is the word? I’m completely struggling with the word.
Mark: We’re not the doom and gloomers?
James: We’re not the doom and gloomers, right. And we’re also not the — it’s the sensationalist, right?
Mark: We report the facts. Unfortunately, in my wanderings on the web, I think we’re the only people that try to truthfully report what’s going on without a bias.
James: Yes. Yes. And all of the click bait and that’s why I say I hate talking about oil prices because it’s just all click bait. It’s all, oh, the world is ending. Oh, this is happening. Oh, this is happening. Yet people in oil and gas we don’t want to really talk about but I think you said it — I can’t remember if you said it while we’re on the mike or off a couple weeks ago where you’re like, “Well, I bet they’re not complaining when they’re filling up their F-150.”
Mark: Yes. I think I said that on the mike and yet you don’t ever hear that. We are by no means sliding the poor people that have lost their jobs or have taken pay cuts. We know that’s going through. We feel for you, right? We’re actually trying to help you with that. We have another show dedicated only to help me find another job in oil and gas. So we know that’s hurting upstream in the service companies touch upstream but the industry as a whole is doing well and we try to report the facts.
James: So speaking of company that does very well, National Oilwell Varco sat down with fool, the Motley Fool.
Mark: Yes. I love National Oilwell and we’re actually, James, you know I have been invited to go sit down and listen to how National Oilwell is using big data to streamline its business.
James: I am going to geek out at that. I am going to be at my max geek level. I can’t wait for that event.
Mark: Yes. And what’s so cool about this, this isn’t theory. This isn’t academia. We actually sit down with one of the leaders of National Oilwell and here how they’re actually doing it like in the real world. So we’ll report back on that after we do it. Great, great interview by the Motley Fool who, speaking of click bait, who loves to sensationalize stuff.
James: They love sensational click bait but that’s the annoying thing is that they have sensational click bait but they also have great content. So it is, you know.
Mark: So this is an interview with Clay Williams, the CEO of National Oilwell Varco and it goes through some of the things that’s happened recently and how National Oilwell got to start. National Oilwell spun off its distribution business into a separate company awhile back. It’s called DistributionNOW.
That was a smart move by National Oilwell so they could separate a part of their business which was big but it was low margin from the other part of the business which is not as big but very high margins. They can on that high margin business which is National Oilwell Varco.
It’s cool that the CEO of both companies, they are friends, right? So they spun it off. The CEO of DistributionNOW actually was one of the direct reports of CEO Clay Williams at National Oilwell Varco and they remain buddies.
They still go out and have a beer or two and they’re just talking about how National Oilwell has a great leadership process in place where they actually groom and train and measure their leadership to eventually run the company, how they’re looking at a set of — their management team is probably their core offering and how they’re able to do things that other companies won’t do.
National Oilwell has a got a big presence in Silicon Valley. How many oil and gas companies do you think have a big presence in Silicon Valley? But they’re looking for new technologies. So great interview. If you want to kind of see behind the scenes of National Oilwell, go check this out.
James: Another cool thing, they have the video and a transcript. I wonder where they got that from.
Mark: Yes. I wonder where they got that from. If you look at the pictures in the video, I think I know that hotel room that they filmed this in because I think I actually film the interview in those exact same chairs.
James: That’s awesome. That’s awesome. Well, we have a good news story here. In Gulf of Mexico, microbes thrive above natural oil seeps.
Mark: I’m glad you found this. I’ve known this for forever but I’ve never talked about it before because I never thought about it. But one of the things that people may not know, crude oil is as natural as you can get. Crude oil is not man-made.
It’s made from the compressed remains of ancient sea beds and dinosaur bones and it’s been compressed by the Earth for hundreds of thousands years in the form of hydrocarbon so oil is natural, 100% natural. Having oil leaks, which in this case they call them seeps in the Gulf of Mexico, is also totally natural. This article is about how there’s microbes that thrive in this environment.
Now, if you read this article, the microbes that they’re studying actually thrive because of natural gas that’s released which brings up nutrients from the deep water but there are also microbes — they don’t talk about this — that actually feed on crude oil. So their food is crude oil. In the oil and gas industry, yes, but the oil and gas industry has taken those microbes and develop them to help clean up spills.
How much more natural is than to get a bunch of microbes to eat the oil which they normally eat anyway when you have an oil spill? I’ve known this for a while. I just never talk about that. But a great article show how oil fits into the natural environment.
James: Yes. It’s a crunchy thing to do. Oil and gas. You might as well be driving your — well, yes, that’s the thing if you’re crunchy then you drive a Jeep which makes a lot of sense but anyway. I thought it was fascinating because you always have the not in my backyard the NIMBY and, oh, it’s oil spills. Let’s get the environmentalists working on this.
Mark: Yes, and I’m not saying that oil is not dangerous. There’s a difference between dangerous and natural. So cocaine, mercury, sulfuric acid, crude oil — all those are natural, 100% natural but they could be dangerous if you use them in a wrong way. Vitamin C, that’s not natural. There’s no spring that puts out vitamin C. There’s no tree that you could go pick vitamin C tablets on. So that’s totally man-made but it’s also very healthy. So people confuse natural and healthy all the time and you really shouldn’t
James: Yes. And they always throw out — I liked it in the Moral Case for Fossil Fuels where he talked about if someone throws a chemical name at you without giving any context to what was the balance and everything, because you could literally name any chemical compound on the — what is it, the table?
Mark: Those are actually elements but you are right. So if I say something like I’m going to put acetylsalicylic acid in your mouth, people will go, “Oh, my God, no.” Now acetylsalicylic acid is aspirin. But if you don’t know that, it sounds horrible because I just used a chemical name.
James: Right or what I said I want them for water, I can’t remember, it sounds really ridiculous.
Mark: Hydrogen dioxide.
James: Oh, yes. You know hydrogen dioxide — I saw actually a couple weeks ago, people were freaking out. I was like, yes, that’s water. Someone said, “You beat me to it.” All right, well we’re running up against our time. We’re going to go into Oil and Gas Sales Experts: 13 Ways to Identify a Pro. We’re going to have to throw that into the show notes. Just talk real quickly about the article though that you have out there, Mark.
Mark: So basically, I have a lot of people, a lot of companies reach out to me and it’s like we’re getting ready to hire a consultant or we’re getting ready to hire a salesperson. How do we know if he really knows oil and gas? I outlined 13 ways that you can identify if there really are an oil and gas pro.
James: Perfect. I’ll go ahead and make an easy link for that. It will be at triberocket.com/experts. So if you want to see that, Mark’s got the video and an extensive article. The Onion of the Week – Study: 90% of Workplacetriberocket.com/experts Injuries Caused By Bare-Knuckle Boxing. And I believe that might be actually a fact in the oil field.
Mark: Actually, in the oil field, it probably is a big factor. I guarantee if you Google boxing roughness, you’d come up with really funny videos.
James: I’m actually going to do that soon as we get done here. So moving on, we have a winner this week. Our winner is Michael — Mark is making fun of me. I can’t. I’m freezing up, Hatherington. Michael Hetherington, QA Inspector at Shepley Engineering.
They are a major contractor and program manager specializing in term contract work predominantly within the nuclear and chemical process plant environments. Their work involves high integrity site and workshop activity within those challenging sectors. Congratulations, Michael! Your bag is on the way. We have an announcement to make about the bags. Mark, go ahead.
Mark: So if you listen to the show, we keep telling you, that’s going to end in January. And now when is it going to end, James?
James: It’s going to end through March and I just talked to Red Wing this morning right before we got on and started recording. And the reason that they’re extending this is because so many people want this thing. The response has been overwhelming. So over there they’re just saying, “We’ve got so many names.”
There are a few people who enter eight times a week or something like that. And so, she just said, “You know what? Let’s just push it through March and give more of an opportunity.” So this is going to go through the end of March now and —
Mark: Folks, if you want one of these awesome bags and they really are awesome, follow the link. It will take you ten seconds to fill out your name, your email address and get put in the pod. Do it. You will be happy, happy, happy if you get one these bags. How cool is that, you get one from Red Wing.
James: Yes, definitely, so no purchase necessary to win. See official rules at redwingshoes.com/podcast. Big Finish. We’ve got events on deck SPE Hydraulic Fracturing. We’ve got a company hosting us out there on February 9th, Mark.
Mark: Yes and that’s Jeremy so hats off to Jeremy for reaching out to us.
James: From Mobile Data Technologies.
Mark: Yes, Mobile Data Technologies, thanks for sponsoring us and we’ll see you at the SPE Hydraulic Fracturing Show. If any of our audience is also going, hit James and I up on Twitter. We’d love to connect with you.
James: Yes and if you have an event that you’d like to bring us to, reach out, let us know. So it’s happening up in the Woodlands at the Marriott Hotel and Convention Center, February 9th through 11th. Of course, the NAPE Expo is coming up, February 10th through 12th. That’s at the George R. Brown. Everybody knows about that but the big thing everybody wants to know about is when are we getting on this rig, Mark?
Mark: So let’s go back to NAPE real quick. Folks, if you’re in the oil and gas industry and you have anything to do with upstream in the service companies, you need to be there. Even this low crude price environment, they’re expecting 10,000 people to show up. They are going to have over 700 vendors there.
There are hours and hours of prospect discussions out there. It’s a great place to network. And what I love about the NAPE Show, it’s only one that we go to, James and I go to, where everybody that’s going there is either there to buy something or sell something. So the energy is very high. So I’m looking for a great turnout.
James: I want to stay on that real quick. The thing I love about people at NAPE is that they’re dealmakers just through and through. It doesn’t matter what you do if you’re not a direct competitor of theirs. I have had so many times where I’ve been at NAPE. “What do you do?” “Well, I do this.” “Oh, good. Johnny, get over here. You need to talk to this guy.” They love hooking people up. They just love doing deals no matter what.
Mark: Yes. I just shot an interview with Jeanine who is the chair of the operating committee in NAPE about why you should go especially in this low crude price environment. And one of things that I had forgotten is NAPE got started in a low crude price environment. NAPE started with $13 a barrel. And so if they’ve grown a bit successful in a low crude price environment and were in a low crude price environment now, you need to be there.
James: Yes, definitely. Back to the rig.
Mark: Yes. So we’re actually doing a rig tour, Saturday, March 5th at 10:00 a.m. in Houston. This is a once-in-a-10-lifetime chance. I still cannot believe I pulled this off. There’s a whole back story here. Even I would never be able to pull this off again because of liability and safety issues but if you’ve never been on an offshore rig, then by the way, you don’t have to get on a boat or helicopter. There are offshore rigs in dry dock in Baytown. We are doing a tour. The only prerequisite is you have to join the API young professionals, which automatically gets you membership into the Houston API chapter,
James: And to qualify to be an API young professional though.
Mark: Yes. You need to either have five years or less experience in the oil and gas industry regardless of your age or you need to be 35 years age or younger. But it’s all of $25 a year to join so we’re not looking at a lot of money. James will put a link up there. We would love to see you out there. James and I will both be out there.
I am still waiting to hear back if we could shoot some video. If we can, we’ll probably do some production out there. So it might be your chance to either get in one of our videos or get on the air. Come. I don’t care what you do in the industry. I don’t even care if you’re in the industry.
James: I don’t even care where you are either.
Mark: Yes. If you have an interest, this is a once-in-a-lifetime to actually go in an offshore rig and I am so looking forward to this.
James: Yes, likewise. Saturday, March 15h, 10:00 a.m. We got one more sponsorship to fill. Talk about that real quick and we got to wrap.
Mark: Yes. So we have one space left. We sold all of our sponsorships for this year and it looks like we’re going to sell it for 2017 before this year is over with. If you want to get in front of an oil and gas audience, if you want us to help you with your business, reach out to James and I, let’s talk. Like I said, one spot left so do it.
James: They can actually go to my website now and find out more information as well.
Mark: Oh, that’s right, that’s right. So James, put a link up. He has a whole page about what’s involved, what you get, the benefits. Yes. Quick easy read. Go check it out.
James: Yes. You can go to triberocket.com/sponsor and that will take you right to the Become a Sponsor page where we’ve got it all laid out for you. We have three questions right now for the first Friday Q&A which is next week. So we need more questions. Please go to triberocket.com/qa and ask us questions.
Mark: If you prefer to leave a voicemail so we can actually play it on the air.
James: Yes. And then actually closing here with the reviews, we have on new four star review and it is from Subzero Ellen G, four stars. “Great job. Enjoy the casual and uncomplicated time of the conversation. No complex jargon or acronyms. Well, that’s because I have to stop you from using acronyms.
Love it. Wish it was a bit shorter with a bit less out-of-topic intro. My commute is 45 minutes a day and don’t like to spend time in just one podcast. Thirty minutes is optimum.” Thank you for the awesome review and we have a podcast for that.
Mark: Yes. And now we have a podcast of that but if you let me change your route, Subzero, we can actually make your commute an hour and a half and this way you can listen to our show.
James: Yes, definitely. We will rock you all over the place. So we’ve mentioned it a few times. It’s definitely gaining traction. If you haven’t checked it out yet, check it out. Oil and Gas Careers podcast. It is a short form show, no longer than 20 minutes, hard stop at 20 minutes.
While we’re talking about the different positions that are available, you get a lot of analysis and insight from Mark in terms of learning more about the oil field so check it out. And leave us a review at triberocket.com/twreviews. That will take you straight in the iTunes store where you can leave us a review.
Mark, do have anything to add? Because we really got to go.
Mark: Yes. On the review things, people do it. We’re trying to kick our competitions’ butt. We need your help. Give us a review that will allow us to pull ahead. Other that than that, do great work, pay it forward, and we will see you next time.
James: Go find some grease, guys.