My computer graphics on people and natural resources.
Buoyancy has returned to the oil and gas industry as prices stabilize in the $50 to $70 range. Capital spending is rebounding and new upstream projects launch weekly. In previous cycles, this is about the point where executives forgot the hard-won lessons of the downturn and began to spend again, pursing growth at the cost of efficiency.
This time, however, a return to old habits could prove an existential mistake. Our analysis finds that fierce competition, technological disruption and regulatory complexity have combined to reduce the profit pool by more than 60%—difficult math that should force oil and gas executives to keep the pressure on their efforts to reduce costs and improve efficiency (see figure)[…]
