As energy in all its forms is essential to both economy and life in general, the challenges associated with finding, harvesting, distributing, and using it efficiently and responsibly are enduring. And whether the current downturn in the global oil market is, or is not, a watershed moment, it is important to remember that as an industry professional you have been presented with a massive summons to action, which also comes with a massive opportunity to shine.
I was raised in Fernie, British Columbia, Canada, a small coal mining and lumber town in Western Canada well acquainted with commodity cycles. After completing my undergraduate and master’s degrees, I travelled to Australia on a Commonwealth scholarship to pursue a PhD in natural resource economics.
During my academic career, I became interested in public policy and commodity markets and on returning home to Western Canada after graduating, I was fortunate to find a way to pursue both these topics at the Alberta Department of Energy. At the time, the provinces and Canada’s federal government were in the process of dismantling a plethora of energy policies and regulations that imposed various types of controls on domestic oil and gas upstream development and markets, as well as internal and external trade. This period of deregulation was a dynamic and challenging time to work on energy policy and, as it turned out, a great entry point for my career in the industry.
One of my first assignments was to help construct the oil and gas price forecasts the Alberta government used to develop its annual operating budgets—a rather fraught task, and equally fraught today.
It seems to me that through successive episodes of oil and gas price crashes and recoveries in the past few decades, the industry has rebuilt itself a bit smarter each time, making it better able to ride out the next set of twists and turns on the commodity roller coaster. I have experienced four major oil price collapses during my career in the industry and cannot say that any specific technical or analytical skill set is better than the other at weathering the storm. At a minimum, understanding exactly what is required of you in your job is essential, as obvious as this sounds. While you, of course, are expected to make a positive contribution to your organization in the best of times, you need to do this in spades during the worst of times.
An irony in the oil and gas industry is that one of the biggest tasks that comes on the heels of the recoveries that follow the downturns is the need to rebuild depleted ranks of skilled and knowledgeable staff. The degree of technical specialization within the industry tends to make this very hard to do, particularly when previously laid-off employees have since redeployed to other sectors. But as I mentioned, I think the industry is getting smarter about managing this. As well, I believe a better understanding of the nature of oil and gas markets today is bringing a longer-term perspective to positioning for the cyclical and structural forces at work in these markets. Most people now realize that making good decisions takes a more nuanced approach than simply adopting a point forecast or extrapolating today’s situation into the future.
Other challenges for the oil and gas industry in recent years have come on the regulatory front. From the wellhead to the tail pipe and burner tip, environmental standards and regulations have become more numerous and more stringent. Objections to these standards and how regulators apply them are proliferating from interest groups previously much less active in this arena. As a consequence, the regulatory process has become more complex and time-consuming and, to some extent, more unpredictable. Inevitably, this has also resulted in decisions about large-scale, and sometimes more innocuous, energy projects becoming very politicized—always a scary proposition to an economist!
I have no doubt the energy industry will continue as an engaging and dynamic place for young professionals to craft their careers. As with any profession, however, doing well will take effort and perseverance—as well as a dollop of good luck and good timing.
Being able to think critically is important. Having the analytical tools to make sense of reams of data is essential. Learning how to distinguish what is interesting from what is relevant is basic—fortunately, this task gets easier with experience.
Learning how to communicate your thoughts and findings clearly and professionally is vital. Endeavoring to learn as much as you can, as fast as you can, and figuring out how to apply it in your job is a way to stand out.
Paying attention to what your boss pays attention to is smart; anticipating what he or she might want to pay attention to is smarter. And summoning an ounce of courage from time to time to take a chance and do something that is daunting for you is necessary, if you wish to move forward.
Lastly, regardless of your area of expertise within the energy sector, if you find yourself in a leadership position one day, you doubtless also will find yourself having to think about issues and make decisions incorporating the perspectives of not just your own, but several different disciplines—including economics. When you get to this point, let me know.
Judith Dwarkin is the chief energy economist at ITG Investment Research in Calgary, Alberta, Canada. ITG Investment Research was formerly known as the Ross Smith Energy Group. Prior to joining Ross Smith, Dwarkin was senior vice president for Global Energy at the Canadian Energy Research Institute where she managed the domestic and international research programs pertaining to crude oil markets and prices. Before that, she was a managing director with the Alberta Petroleum Marketing Commission, being responsible for oil and gas market analysis and energy regulatory interventions on behalf of the Alberta government. Dwarkin holds BA, MA, and PhD degrees in economics.