As oil and gas prices continue to fall significantly, companies are finding themselves under more and more pressure to cut spending in order to avoid eliminating positions. Luckily, we at CrudeHands have a solution for you. But first, lets drill deeper into the crude problem.
Why are oil and gas prices falling?
Some might be tempted to answer this question using their knowledge of high school economics; increased supply and decreased demand means lower cost. Although this explanation carries much truth, it lacks the detail needed to allow us to truly grasp the severity of the problem. So, to answer this question conclusively, another question must first be asked; why is the supply increasing? A significant increase in the production of oil and gas is largely, but not completely, due to fairly recent innovations in hydraulic fracturing, or “fracking,” techniques. Fracking is the process of drilling and injecting highly pressurized liquids in order to crack shale rock and release any trapped oil or natural gas. The United States has championed these new techniques and has ramped up production, contributing to the overall increase of global oil and gas supply. However, this alone couldn’t possibly be the reason why the entire oil and gas field is suffering, right? Right.
The Game of Chicken
With prices of crude oil falling below $50 a barrel, oil-exporting countries are experiencing a variety of negative effects, from inflation to recession. Some experts in the oil and gas field feel the need to cut production in order to allow the cost per barrel to rise and finally lift the industry out of its rough patch. Other experts believe that cutting production will cause countries to lose their global market share. These two radically different opinions have caused countries to become engaged in what we, as a Texas founded manufacturer, refer to as The Game of Chicken. The rules are simple; the first country to cut or cease production loses. Loses what, you may ask? Revenue, market share, economic stability, workforce; the list goes on. This all seems unnecessarily complicated, right? If cutting production is the solution, then why does the first to cut production suffer? The first country to give in essentially loses all for the sake of others. In a world where most countries are engaged in a race for economic supremacy, you can see why the previous statement can prove difficult. But, suppose that an important oil-exporting country does in fact cut production. Would all troubles end right then and there?
Lets examine the past in order to predict the future. In the 1980s, a similar slump in the oil and gas field prompted Saudi Arabia, one of the world’s largest producers of petroleum, to cut their production from 10 million barrels per day to 2.5 million barrels per day. Problem solved? Not even close. Not only did the prices of oil continue to fall despite the decreased production, but the economy of Saudi Arabia also took a large hit. The nearly 75% cut in production caused 16 years of budget deficits and left the country deeply in debt. It seems as if cutting production is anything but the solution. So, what is the solution?
What can CrudeHands do for you?
With the recent fall in oil prices, petroleum-based businesses are desperately trying to determine the steps necessary to reduce supply chain costs. Boardrooms everywhere are evaluating which parts of the supply chain offer the most realistic opportunity for cost reduction. Furthermore, it is predicted that health and safety will suffer as an unfortunate consequence of oil prices plummeting. It is inevitable that certain safety initiatives will fall by the wayside as capital is re-positioned, possibly resulting in a greater loss of life and loss time incidents.
CrudeHands believes that you shouldn’t have to choose operations over safety when prioritizing budget. We are committed to providing you reasonable and effective work force PPE solutions. Although we can’t directly influence the global price per barrel, we can help your business prosper even during times of tightening the belt. Our never ending research and development means more advanced hand safety technology for your roughnecks and increased savings for you.
The Practice of Good Stewardship is a Lost Art
Organizationally speaking, workers want to do right by companies to save, however they just need the tools to participate. It is our new impact glove Crude SAVE-ty program that combines everything that the industry knows about great leadership, implementing policy, and providing easy-to-use tools to positively impact employees’ behavior. This programmatic resource sends a powerful message of stewardship that all workers need to do their part in reducing expenses, hence participating directly in margin enhancement. Through this new found sense of stewardship, CrudeHands predicts that we can exponentially save companies on their overall glove spend. Does it get any better? Yes. This savings is not only inspiring when we are all attempting to tighten our expenditure budget, but the savings are sustainable over time.
CrudeHand’s Crude SAVE-ty program is pioneering meaningful change in oil and gas as we are helping companies transition from disposable gloves to gloves “perceived” as part of worker’s overall PPE. Let’s face it, changing employee behavior is tough work. Real behavior changes require deeper connections with individuals and an opportunity for these individuals to think creatively to solve the circumstances that ultimately led to poor behavior.
Let the Crude SAVE-ty program help your business GUARD SPEND: See it, believe it, talk it, and mentor it.
