David KnottCalling at a gasoline station on my way to work after the New Year break, I imagined what would happen if the petroleum industry was run like politics.
I had been listening on the car radio to a review of 1998 world events: in Washington, three crises linked to the Monica Lewinsky hearings, each followed by an air strike on Baghdad; in Westminster, a festering money-lending scandal; in Moscow, imminent anarchy; in Brussels, evidence of corruption.
If the petroleum industry ran like politics, I mused, most countries would have at most two main fuel and lubricants retailers to choose from. Both would offer only products that were expensive yet incapable of running an engine cleanly and effectively.
Retail choiceIf a U.S. driver complained to the retail station attendant about the poor fuel he or she had been sold, the conversation might run something like this:
Customer: "Your gasoline is slowly ruining my engine yet there are no details available anywhere about what I'm buying. Could you tell me exactly what this fuel is?"
Attendant: "It depends on what you definition of 'is' is." In the U.K., the equivalent conversation might be:
Customer: "Your petrol is fit only for burning in a boiler. Whatever happened to clean fuels and beneficial fuel additives?"
Attendant: "I'm glad you asked me that question, because it allows me to reassure you that this company strives to be seen to be providing better fuels, and this is good for the petroleum industry, good for the customer, and good for Britain."
Despite the continual dissatisfaction of the bulk of customers with the two fuel companies, there would be considerable brand loyalty. Customers would stick with their fuel company for the same reason they support politicians: out of fear that the alternative is even worse.
Any time one of the two companies feared its actions were making it more unpopular than the competitor, it would offer token pledges to customers while loudly and repeatedly accusing the other company of its own failings.
Strategic visionsThe two politically run oil companies would have a longer planning period than current companies: to the next election rather than the end of the current financial year.
Yet this one benefit would be rendered useless by the inability of the companies to achieve anything at the strategic level because of internal squabbling.
The company presidents would promote only people who agree with them and whom they do not view as a long-term threat to their own position. Real companies cannot afford to do this, although cynics might say otherwise.
By focusing on outmaneuvering rather than outperforming their rival, the two companies would be uninterested in developing better fuels and lubricants and cutting costs.
Nor would these hypothetical petroleum giants have any qualms about working with brutal foreign regimes to exploit new resources. Also, environmental issues would be no higher on the list of priorities.
If governments operated like petroleum companies, on the other hand, there could be chaos as a frenzy of mergers among countries would make the global map a lot less colorful.
Copyright 1998 Oil & Gas Journal. All Rights Reserved.