Time for a new strategy, from hoarding to helping

Most strategy games require only a single strategy, well-executed. A few games, though, require a switch in strategy, and the timing of that strategy is crucial. The "great game of business" runs much longer and with more complexity. It certainly requires shifts in strategy, and timing is crucial.

Our world was already shifting as the shale revolution was making its last slow-motion bust when the corona price war suddenly crashed on every corner of our global industry.

The tsunami that hit Japan just over nine years ago killed over 20,000 people, most with only about 20 minutes notice and mostly elderly. The quake, which was literally audible to satellites, triggered the largest disaster faced by the country since two atom bombs ended the Second World War. Quite apart from the radiation from the secondary disaster of a nuclear meltdown, the region faced utter destruction of infrastructure and mass shortages. The national guard stepped in, and many countries sent help as well. Precisely because of all of this destruction, it became a natural experiment in handling disasters.

Dr. Daniel Aldrich studies "security and resilience," and his work on the Tohoku tsunami applies directly. He found that the communities that fared the best were not the ones best prepared nor the richest. The ones that fared the best were the ones with the strongest communities. During and immediately after the disaster, people survived because they helped each other. When the tsunami alarms sounded, time was the essence of the response. The same was true in another case study--the responses of St. Louis and Pittsburgh to the 1918 flu epidemic. The slower the community moved to protect each other, the more people died.

In the immediate danger posed by the corona virus, the slower our communities move to help each other, the more people will physically die. It is time to stop hoarding and to start helping. If we collaborate on physical distancing and on not clearing out the shelves (especially of the several products we could replace with tap water, a rag, and perhaps a jug of Clorox), then we will all be less fearful and, in fact, safer. Those who reach out to share and to help neighbors and family are the ones making the nation stronger and their communities safer.

The same is true for the community of the oil industry facing financial death. If we can find ways to work together and to support each other, we will be all be better off. If, for example, producers would petition the Texas Railroad Commission to revive oil proration, we might provoke market confidence again. (As a historical matter, market-driven proration was created for exactly this scenario when the massive East Texas field flooded the oil market and collapsed prices by 90%.) The Railroad Commission has floated this idea and been invited to speak about it during the OPEC meeting in June.

Companies can work together to share data, to share analyses, to share services and equipment and other costs. If we work together, then perhaps we can preserve more of the expertise that we all will need in the future from service companies and from capable employees on whose backs the recovery will be built. Perhaps we can earn again the faith of investors who have turned their backs on the industry.

The land grab is over, and the nature of competition is changed. In most ways, it is no longer a zero-sum game, and now is the time for working together. And the sooner the better. Timing is crucial.

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