Anyhow, he's noticed the oil price is falling, just like we have. So what does he write ? Back To Basics For The Energy Sector, that's what. He reckons that oil companies will be in a spot of bother, Sherlock, and this is his sage advice, his hard-hitting 4-point plan (I am not making this up.)
- Cut Costs: "goodbye to the corporate jets, the lavish expenses and the padded leather of town centre offices"
- Cut assumptions about future price rises (sic): consider a $80 scenario
- Drop projects that don't fly at $80
- More R&D on cost-cutting technology
The R&D one made me laugh out loud. There cannot be an industry on the planet that puts more effort and money into radical cost-cutting technologies. Single-lift platforms; horizontal drilling; unmanned facilities; the list goes on. This is the industry that survived $10 as recently as 1998.
The only oil companies that can't see life at anything less than $120 are the smallest, most desperate exploration-only shops, who will simply have to relinquish their acreage to someone bigger. And life will go on.
Meanwhile, I understand the newspaper business isn't so profitable these days: and if the FT wants any cost-cutting suggestions ...