I'm Not Buying It.

People within the oil & gas industry need to ask themselves a direct question: given the facts as they stand today, why have producer officers and directors not been held accountable for the damage they had the authority, responsibility, and resources to prevent?

In 2015, oil & gas producer investors lost faith and trust in the industry’s ability to be accountable and profitable. They actively withdrew further financial support. Rather than address the substance of those concerns, producers continued promoting their supposed performance, discipline, and accountability while doing little to remedy the structural failures that caused investors to walk away.

They were warned of the consequences of inaction. They were offered a solution in the form of Synallagi. Yet as the damage and destruction spread across the industry, producer leadership watched it unfold and carried on with little more than a shrug. Capacity deteriorated. Service sector confidence collapsed. Accountability weakened. Competitiveness continued to atrophy. Profitability remained subordinate to excuses, narratives, and the preservation of executive control.

This past weekend, that failure appeared to reach a new level of disqualification. Both Exxon and Chevron were in the news warning consumers that oil prices were likely to rise. The audacity of that message is difficult to overstate. After years of blaming others, generating excuses, and assigning scapegoats, producer leadership now appears to be telling consumers, in effect, not to look to them for reliable oil & gas supply.

That is not leadership. That is an abdication of responsibility.

The industry should not accept this narrative. Producers know they are increasingly unable to meet market demand and are using war and geopolitical instability as convenient explanations for a price structure they created. Oil & gas is a price maker industry. People, Ideas & Objects has stated repeatedly that unprofitable production should not be produced in low-price environments. Those reserves should be preserved until higher prices make production commercially justified. Theoretically those volumes would be available today.

Instead, producers sold all their production at massive economic losses, obscured those losses through inadequate property-level accountability, preserved their positions and personal compensation while the industry’s and most particularly the service industry's productive and industrial capacities were materially weakened. Now, as prices become profitable, after they consumed valuable reserves in weak markets, they now warn consumers about the consequences of their self serving inactions.

This represents the fundamental breakdown of leadership. Producer directors and officers possessed the necessary resources, authority, and responsibility to intervene, yet they chose to disregard investor anxieties and spurned the proposed Synallagi solution. By doing so, they inflicted significant harm on the service sector and elsewhere. 

I’m not buying their warning to consumers. No one else should either, we must no longer tolerate these justifications; instead, we must insist on true accountability.