Skip to main content

Men Plan, Gods Laugh

The morning after the State of the Union address I overheard this discussion.   An individual referenced a proclamation made by President Biden regarding fossil fuel usage to be net zero emissions by 2050, effectively phasing out oil.  The comment, framed as a question, was; “If you were an executive of an oil company having to make decisions about capital investments today knowing that the future might make your product obsolete what would do?”

My first thought was you’d have to assess the potential to be reality.  There is one risk in investing and running a business that you can’t minimize; government risk.  The ability of a government to, in the blink of an eye, change the landscape is forever looming.  If you think the rhetoric is just hot air then I’d say move forward as normal.  Why allow idle boast to drive decisions?  If though, you fear the risk as legit, then you have got to take a completely different tact.

What really is the potential for the risk to be legit?  Tough to say but it has happened and will likely happen again.  The most recent sudden landscape change was at the beginning of COVID and the call went out across the land to shut down every business.  WHAM!!!!  Business plans were shot to hell as production and revenue came to a screeching halt.  The businesses that were able to survive had quickly adjusted what or how they did business.  This change was short term, not long term in nature like ending oil usage.

Long term changes in the landscape have occurred and will likely occur again.  There are several examples; the abolishment of slavery and prohibition. Both dramatically changed how businesses operated.  Looking specifically at prohibition, prior there were thousands of breweries, distilleries and wineries.  More closely looking at brewers of beer roughly 10% survived.  Our current robust explosion of “microbrew” is only now matching the number of breweries of the last 1800’s.  One brewer that did manage to survive was Anheuser-Busch.   They did it by pivoting, making freezer trucks and campers for cars was one of the many things it did.

My answer to this individual’s question is this; taken seriously I would begin diversifying away from oil, while holding onto what you have originally done for as long as you could, hopefully to the end.  Why? First part is obvious, you got to be able to survive after the last well pumped its last drop.  You have to start making freezer trucks.  Second part is basic economics.  During the time that oil and gas producers are being phased out you want to be one of the last standing because you will be able to continue to hold prices high as fewer suppliers are in the market.  Slowly decommission as warranted, minimal investment to keep going.  If you are the last and only one at the end, as demand is slowing you can wait until the inflection point to bail out or ride it to the end.  Best scenario is you sell your last gallon just when one more gallon was needed.  Then turn off the spigot and with your inflated profits ride off into the sunset fully capitalized for your next incarnation.

Comments

Post a Comment

Popular posts from this blog

First Sighting

By this point in my life I’d flown enough to have seen the world through a wider lens than afforded on a car trip.  I’d seen the tree tops, fields and mountains from an airplane window, but flying to an island, looking out the window and seeing effectively what looked like nothing was an eye opening experience.  Water is pretty featureless from 35,000 feet.  Just black as far in all directions as you can see.  It really drove home the reality of how huge the ocean is, and the world by extension and how small we are in comparison.  There is a lot to see out there and I was seeing a small bit of it for the first time. After five hours of the featureless, blackness our destination appeared as a disruption to the nothingness on the horizon.  The earth started to poke its rocky, tree covered dermis forth from the water.  The black water started to turn to dark blue giving away to ever lighter hues of blue.  The outline of the land looked like the pip...
Post a Comment
Read more

Agnes Martin, Artist? That is such BULLSHIT!

I didn't have any intent to blog today.  Then I saw the GOOGLE doodle for today, a set of vertical colored stripes.  Since I use several computers, but only one do I stay logged in on my Google account I figured the other computers were just not showing the image correctly.  This seems to have been the case in the past when these Google doodles have animation.  I went to my computer logged into Google, but no movement when I moved my mouse over the image.  So I clicked on the image.   This led me to all the associated links and discussions of what this doodle was celebrating Agnes Martin. This is some of the first text I read: Agnes Bernice Martin was a Canadian-American abstract painter, often referred to as a minimalist; Martin considered herself an abstract expressionist. She was awarded a National Medal of Arts from the National Endowment for the Arts in 1998" from Wikipedia.  I continued to look at more images.  It seems all this women painte...
3 comments
Read more

Banana Waits To Die

BANANA WAITS TO DIE   I’m one banana lying prone I got forgot.  I’m all alone   How did this happen? Why just me? I started life with twenty three   All alone I lie and wait What will be my final fate?   Why do I ask, I really know I saw it happen to Old Joe   The top banana in my bunch Selected for a sailor’s lunch   On the ship from Panama “OH MY GOD,” screamed Grandmamma   “The sailor just set Joey down!” The thought of it just makes me frown   Sitting in the hot sun light A few days passed he died of blight   Once brightly yellow then to black Once stiff and hardy then to slack   His innards oozed, the sight was sad It made my bunch so very mad   Now it’s me here all alone One banana with no phone   I feel as if up in the sky There is one really creepy eye   Looking down upon me here This is what I really fear   I know it gets s...
Post a Comment
Read more