Why It's So Hard to Get the Oil Taps Turned Back On

Joe Weisenthal (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

Tracy, you know, we recently talked with Goldman's top metal strategist, Nick Snowden. And one of the things that really stuck out, there are a lot of things, we talked about copper scarcity.

But one of the things among many interesting points was the idea of like, there's been a talent shortage in this industry.

Tracy Alloway (0:36)

Yeah, and you can kind of see why, right?

I mean, first of all, environmental concerns. And I imagine that like, particularly the younger generation might have some reservations about going into something like mining. And then secondly, it just wasn't a profitable industry for quite a long period of time, or at least I'm thinking specifically about shale oil in the US, but you had the big boom, and sure people made a lot of money in that, but then you had the massive bust. And it often feels like kind of an uncertain industry that swings between feast and famine all the time.

Joe Weisenthal (1:15)

Yeah, so imagine you're thinking about your career and you're pretty technical minded, you're pretty smart, you could do a lot of things with your intelligence, and you're faced with two options. It's like, okay, do you want to go to North Dakota or somewhere up in Canada and analyze rock formations, or do you want to live in California and work for Facebook and get lots of free lunches and free dry cleaning and maybe make millions of dollars?

I don't know, it seems like kind of an easy choice from the perspective of a potential talented person thinking about which direction they want to take their life in.

Tracy Alloway (1:50)

Well, also, I mean, Silicon Valley was very good at selling the idea of making the world a better place.

Joe Weisenthal (1:55)

Yeah, me too.

Tracy Alloway (1:56)

Which I don't think is as impactful as it once was, that message. I don't think as many people believe it, but certainly for a while, it was about, come build a better future in tech versus come dig out a rock in Northern Canada.

Joe Weisenthal (2:11)

Yeah, so come to Canada, dig out a rock, be cold all the time. Oh, and by the way, you're contributing to the worsening of the planet through global warming. Oh, and by the way, this industry has no future.

These were like the messages. This is the message we could tell. It's like, you're gonna contribute to climate change by participating in this industry. Also, the industry has no future because it's all gonna disappear because of electric cars or whatever. So all these things, it's like, or do software make a fortune? It seems like you can see why people made one choice and not the other.

Tracy Alloway (2:42)

Yeah, so we obviously have to dig into this. No pun intended, but yeah, we're gonna dig into the talent shortage in energy and mining.

Joe Weisenthal (2:51)

Right, and so there's all kinds of bottlenecks. Now, of course, everything's flipped and there's like, well, why can't we restart the mines? And why can't we get drilling again for energy, you know, natural gas and oil? There is a pickup in activity, but it has not been as robust as people expected.

So what are the constraints on getting everything going again and getting dirty stuff out of the ground for whether it's gasoline or fuel or metals that we need for decarbonization and electricity?

I'm very excited about our guest, someone who understands the space deeply. We are going to be speaking to Peter Tertzakian. He is the Managing Director of ARK Financial, a private equity company that specifically focuses on energy. And he knows a lot about the nuts and bolts of this space and investing in this space. So Peter, thank you so much for joining us.

Peter Tertzakian (3:44)

Well, it's my pleasure. I'm delighted to be on the program.

Joe Weisenthal (3:46)

So is that true, sort of like the premise that we started out this conversation that the number of people wanting to make a career sort of like petroleum engineers or mining engineers has really tailed off over the last decade?

Peter Tertzakian (4:01)

Yes, that's true. Actually, there's a double whammy. Also, what we're seeing and we're gonna see more of is that the older generation is set to retire.

And now with these higher commodity prices, they are going to cash in, so to speak, and be much more apt to exit the business. And with nobody coming into the business, it's going to make the problem more acute.