Now, 5 years later, most pundits think the world has reached “peak oil” usage, and demand for oil will only fall.Since 2015 Exxon’s equity value (XOM) has declined 65%. Due to declining demand, the company is being forced to restructure and possibly cut its dividend as the company shrinks.
Some would look only at short-term issues like the pandemic, but the economy in China has fully recovered – yet its demand for oil has not. Or some might say that oil prices are down only because Saudi Arabia and Russia are battling over market share – but this only portends more bad news for Exxon because 2 giants with the lowest cost battling for share will only make it harder for Exxon to sell products, even at a lower price and little or no margin.
Unfortunately, the pandemic has created an acceleration in the trends that are dooming profits for oil companies like Exxon. Once business happened in physical meetings where we transported ourselves by auto or plane fueled by oil. Now, meetings are being held on-line, virtually. Increasingly individuals, and companies, have learned not only how to use this technology but that they are more productive. Less wasted commuting time, less wasted hallway conversation time, fewer interruptions, and a recognition that it is possible to cut meeting time allowing attendees to better streamline work and decision-making. Speaking of work, virtual meetings are leading to better employee concentration due to better scheduling of time for meetings, and scheduling time for individual work.
General Motors – $49B
Ford – $31B
Boeing – $83B
United Airlines – $10B
American Airlines – $6B
Tesla market cap – $380BWhy this walk down the path of recent history? Markets shift – often a lot faster than we would like to imagine. The economic hurt on those left behind is enormous. The opportunity for new leaders even more enormous. On the back end of trends is a LOT of pain. On the front end of trends is a lot of happy, happy. It is incredibly important to pick out the telltales and incorporate them into your planning. Earlier rather than later.Let trends direct your investments and your business decisions – look forward not backward. You want to be Zoom or Tesla (or own the stocks,) not Exxon, GM or Boeing (nor own those stocks.)
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Speaking of work, virtual meetings are leading to better employee concentration due to better scheduling of time for meetings, and scheduling time for individual work. – Where does this data come from? I challenge this statement as someone who now works 12-14 hour days as a result of WFM. It is so hard to connect with stakeholders when you can’t run into them in the hall, or head down to their office. Everyone’s calendars are solidly blocked just to plan time in between time to connect on important matters.
But regarding industry shifts, you make very strong points… sharing this article with my son (20) and daughter (17) both very interested in learning how and where to invest.
What was it, 30 years ago, when people were enamored with MBWA – Management By Walking Around? Some folks thought you could lead and manage just by who you bumped into. That led to all kinds of bad decisions as leaders obtained random bits of info that were not relevant for managing the business. We’re now a lot more efficient as managers, and the tools available to us allow that efficiency to improve – and decision making to improve as well. Any organization where calendars are constantly blocked for meetings indicates a problem far worse than working from home – it is a telltale of an organization so inefficient it isn’t focusing on its value proposition and knowing how to keep relevant to customers.
Dead on! Excellent article. The world certainly has changed.