Cry ‘Havoc!’

It is well known among those familiar with military history that those who excel in a peacetime army are often useless during wartime.  The reason for this is the personalities and skills required to succeed in the intensely political and bureaucratic environment of an army at peace are completely different from those required to ensure the same army prevails when the bullets start to fly.  As such, when an army embarks on the first campaign of the war it often gets its arse kicked or fails to achieve what it set out to do, and much soul-searching occurs back at HQ.  Eventually the army or political leadership figure out what is going wrong and start replacing the general staff with those who have demonstrated a grasp of combat operations.

A similar thing occurs in the oil business, and I am sure across many other industries as well.  The type of manager which occupies the upper echelons of oil companies, engineering companies, and service providers during boom times of $100 dollar per barrel oil is generally not the type of manager you want trying to turn things around when the price crashes to below $50 per barrel.

The reasons are largely the same for each case.  Officers in a peacetime army can afford to make mistakes as nobody is getting killed and territory is not being lost.  They also have the luxury of time to engage in indecision, blame-shifting, arse-licking, and self-promotion.  An officer in a wartime army must weigh up a situation and make decisions which, if wrong, could result in the deaths of hundreds of people and the loss of a key city.  He has little time to engage in anything other than killing the enemy and achieving whatever objectives he has been set.  A peacetime officer is judged on many opaque factors including his social class, his network of friends and relatives, and his ability to get people to like him.  A wartime officer is judged solely on the success of his operations which can be judged easily, rapidly, and ruthlessly.  For a combat officer there is nowhere to hide: perform or else.  Under such conditions certain men flourish.

When the oil price is high the whole industry is awash with money.  As revenues, rig hire rates, and contractor costs soar it is pretty difficult not to make money.  And as profits rise the law of diminishing returns makes an appearance.  A company making $10k per year profit will put in significant efforts to increase that to $11k, whereas a company making $100m per year won’t go to any special effort to make $105m.  A sustained high oil price meant guaranteed profits for most companies involved in the industry (show me the last one that went bust), and in such an environment there is little incentive to make things efficient or even work properly.

If I’m being brutally honest, the last several years have seen the oil industry’s priorities shift from getting something done safely and efficiently to the collective management feathering their own nests.  I’ve written about this at length already, and I am convinced that repeated record profits have been the primary reason.  People trying to do the right thing have been hounded out of the industry (or at least the management positions) in favour of those who will do whatever makes them look good in the eyes of their own hierarchy.  Hell, even competence – the ability to carry out a simple management task – ceased to be a requirement years ago, or at least it has been absent from the industry I’ve worked in most of my life.  People were promoted, or employed directly, into management based on one of two criteria:

1) Number of years in employment, which the entire industry mistakenly equates to experience; or

2)  Recommendation from a friend or relative.

Despite having met some truly excellent managers, the incompetence and inexperience I have witnessed at every stage of my career is staggering.  I have seen everything: ageing, womanising drunks engaged more in sex tourism than employment; weasel-faced sociopaths; deeply unintelligent fat cowboys who’d never set foot outside Texas; braying idiots recruited right out of the officers’ mess of some useless British regiment; men recruited on the basis of their having once played rugby with the bloke who employed them; weak, pathetic individuals installed thanks to their wife’s friendship with a director’s wife; ex-warehousemen employed as construction managers because they shared a native tongue with the interviewer, who was uncomfortable with English; people parachuted in from entirely unrelated industries because of their class background; craven, cowardly, spiteful individuals who would lie to their infant children if it made them look good; and dozens upon dozens of those who delight in arse-licking those above them while shitting on those below them.  All of them paid handsome salaries within extremely generous packages making each one individually very wealthy, while not a single one could run a bath, lead a sailor on a pub crawl, or organise a shitfight in a sewer.  Crucially, very few have ever seen hard times.

These are the industry’s peacetime officers and this downturn will reveal that we have an awful lot of George McClellans and very few James Longstreets.  Their incompetence has been masked by the high oil price and all the signs are pointing to a long, brutal battle ahead of us.  By the time the year is out, we will start seeing casualty reports.  If the oil price hasn’t recovered by mid-2016, we’re going to see a significant shift towards individuals who can deliver when failure is not an option.  As someone who has a chestful of campaign medals from being posted to shitholes on low pay for companies that are going bankrupt, and has often been made to feel extremely unwelcome in this peacetime army of self-righteous, preening tosspots, I’m looking forward to seeing their faces after their first night in a muddy foxhole.

It’s going to be a hoot.

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One Response to Cry ‘Havoc!’

  1. dearieme says:

    I was talking to a bloke recently who, most unusually for him, made a disparaging sexist remark about his female boss. The problem, it turned out, was that she’d got her job by strategic shagging, and had proved massively incompetent, and odious to boot. I’ve worked for some turds in my time, but never for a graduate of the casting couch.