It has been almost 2 years since the news of the global oil-price collapse came. 2014 was a year marked by a price shock which was around $100/barrel (peak prices at that time), which had fallen to $60/barrel by the end of the year.

Now, even though the prices seem to be increasing, it is difficult to say if that will return to sustained levels above $70 per barrel any time soon.

With the news of the price drop, I couldn’t help to notice that the industry reacted to this event same as the individual reacts to the news of a grief. According to the Kübler-Ross model of stages of grief, the five stages are denial, anger, bargaining, depression, and acceptance.

The industry responded by experiencing the five stages of grief:

  • Denial: “I don’t think this is here to stay. It’s just a glitch!”
  • Anger: “This is all OPEC’s fault and their decision. We are pumping the same amount!”
  • Bargaining: “If only we had taken steps for returns from the start, not growth.”
  • Depression: “There seems to be no improvement on the prices. We can’t expect profits when the cash flow is still dropping.”
  • Acceptance: “I guess we’d better formulate some steps to ride this out for as long as it takes” (current view of most players)

I think the Kübler-Ross model can be challenged. Stage five doesn’t have to be just acceptance in this case; it can be the determination to bring about the change in the process to stabilize and enhance the savings.

The organization should refuse to accept this inevitability; instead seize the opportunity to the fullest. The industry can look at the low prices of their product as an opportunity for the procurement professionals. They should embed procurement best practices to ensure effective and better savings.

Read our latest whitepaper “Saving is a Suite Habit” to identify 5 ways the oil and gas industry can transform procurement to boost savings and profits.

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