‘The Founders Could Not Possibly Have Imagined…’ [Fill In The Blank]

Two oil drilling rigs, two identical workplace accidents: One happens on a modular drilling rig atop Fixed Platform #3 (below), the other on Floating Rig #7. Depending on the severity of the injury and the talent of the plaintiff’s attorney, a claim on a floating rig is worth an order of magnitude more than the identical injury that occurred on a fixed platform.


Various types of oil platforms and drilling rigs used in the Gulf of Mexico. By Office of Ocean Exploration and Research, NOAA. Public Domain, https://commons.wikimedia.org/w/index.php?curid=10407950

Why is that? Governing law: Example 1, Example 2. But these laws exist in the context of Article III, Section 2 of the Constitution, which grants Federal courts jurisdiction in cases of admiralty and maritime law.* Since Rig #7 is a floating vessel, any worker is considered to be an able-bodied seaman and subject to the laws’ protections, including the right to sue for damages in Federal court.

A worker on Platform #3 is, well, just a worker, and workers have workers’ comp, which pays your lost time & medical bills, but no exemplary damages, loss of consortium, pain & suffering, etc.

This is outrageous! Absurd! The Framers of our Constitution could not have possibly predicted offshore oil development, semi-submersible drilling rigs and compliant towers in 1,000+ ft of water. Their original intent was certainly to cover sailors on merchant vessels, but not drilling roughnecks!

Yeah, try convincing the plaintiffs’ bar of Texas and Louisiana of that. Their bread-and-butter cases are admiralty and maritime cases, many of them on drilling rigs. I’m sure each and every one of them is a die-hard originalist, at least when it comes to Article III, Section 2.

A Constitution is an agreement among parties who have agreed to be bound by it. A Constitution would not be a Constitution if its words were malleable. There is a reason why it contains a process for amendment, instead of suggesting that the parties just make it up as they go along. There is also a reason why the amendment process is a difficult one.

The Framers were among the most gifted and sophisticated men of their day. Some were inventors in their own right; their Constitution provided for patents “to promote the progress of science and useful arts…” Of course they expected innovation and technological progress.

The argument that the Framers intended to limit our Constitutional protections to limits known in their time is b***shit on stilts. I’ve not heard anyone advance that argument in the realm of electronic communication, say, or  abortion women’s health.

*  Legal experts, please be kind. I am not a lawyer, but this is my layman’s understanding of the legal and Constitutional issues.

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King Hubbert, Peak Oil and Central Planning

M. King Hubbert’s name will forever be associated with Peak Oil Theory. Hubbert (1903-89) is best known for a bold and lonely prediction he made when he was working for Shell Oil in 1956: U.S. oil production would continue increasing to a peak in 1970, followed by an inexorable and painful decline to ultimate depletion of the resource. The symmetrical curve came to be known as “Hubbert’s Peak”.

Hubbert nailed the timing. In the US, production peaked around 10 million barrels of oil per day in 1970, followed by 35 years of steady declines and ever increasing dependence on imported oil. Doomsayers anxiously awaited global calamity that would strike sometime after 2000, when Hubbert foresaw a peak in global production.

It’s 2016, and the US is still a leading oil producer. Domestic oil production is near its 1970 peak; cumulatively, we have blown past Hubbert’s high-side estimate of 200 billion barrels, even excluding Alaska. Global production, 90+ million barrels per day, is at an all-time high. Tankers and tank farms are bursting at the seams (figuratively) with surplus oil production.

Continue reading

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OK, Mr. Art-of-the-Deal, Let’s Negotiate.

When your only tool is a hammer, every problem is a nail; to Trump, everything is a negotiation. An election is nothing more than a protracted negotiation with various interest groups (“the blacks”, “the Hispanics”, “the evangelicals”, etc.), not a competition among statesmen vying to win the support of voters.

In a negotiation, every party has its own motives; a good negotiator works to understand each party’s motives, including his/her own. It was predictable that Trump the Republican nominee would run to Hillary’s left. He has to go after disaffected Sanders voters; enough of them will believe his promises about the minimum wage, union jobs and ultimately, I predict, student loan forgiveness that pure monetary self-interest may buy their support.

So in this negotiation, let’s look at negotiating theory in the style of the Harvard Business School, and its implications for conservative strategy in answering the question, “What can Candidate Trump do to justify my vote?”


Each party to a negotiation should be aware of his/her BATNA: “Best Alternative to a Negotiated Agreement”. If you quit the negotiation early (#NEVERTRUMP), the BATNA is the result you accept.

Wikipedia says:

…[The] BATNA is the most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached. BATNA is the key focus and the driving force behind a successful negotiator. A party should generally not accept a worse resolution than its BATNA. Care should be taken, however, to ensure that deals are accurately valued, taking into account all considerations, such as relationship value, time value of money and the likelihood that the other party will live up to their side of the bargain. These other considerations are often difficult to value, since they are frequently based on uncertain or qualitative considerations, rather than easily measurable and quantifiable factors. [Emphasis added.]

The highlighted part is Trump’s dilemma. We’ll get back to that in a bit.

The Value Proposition

This is where I fall back on my training in the oil and gas business and the practice of Decision Making Under Uncertainty.

A Democratic victory in 2016 is a discrete negative outcome. The Hell that we have will continue for four, or maybe eight, more years. It is our BATNA. Some conservatives have already embraced it, citing logic that frankly escapes me.

The exact outcome of a Trump win is highly uncertain. Might he be a worse alternative than Hillary? An undeniable possibility. Better than Bush I or II? Doubtful but possible. Better than Reagan? Not a chance. I agree with Ben Howe in his assessment that on balance a Trump presidency would be marginally better (i.e., higher in “expected value”, or risk-weighted outcomes) than a Hillary presidency.

What does the Trump Value Proposition look like today, as compared to our BATNA?Consider the following cartoon:

5-19-2016 5-13-56 PM

Every voter’s assessment of this value proposition will be different. I’ll not debate the relative values assigned; instead, let’s ponder the implications of negotiating theory. In this base case, the weighted average of the range of possible Trump outcomes is to the right (“better”) than the outcome of a Clinton presidency. I’m conceding here about a 10% chance Trump turns out to be worse than Obama and about the same chance he’ll be more successful than Bush I or II.

What can Trump do the change the Value Proposition for Conservative voters?

Last week, the Trump campaign floated a list of eleven conservative jurists he says he would consider to fill the Scalia seat on the Supreme Court. It’s a negotiation, remember? He’s sweetening the pot.

The problem Trump has created for himself is that his verbal promises mean nothing.

He was opposed to a higher minimum wage, but now thinks we should look at raising it. Negotiating.

He was for building a wall and deporting 11 million, then assured the New York Times with a nod and a wink that he didn’t really mean it. It was, after all, just negotiating.

His goal, after all, is to get elected. That’s it. Unlike the commercial construction business, there are no contracts or covenants that bind the candidate to the representations he makes to gain votes.

Except one. The Constitution.

Sometime between now and the close of the Cleveland Convention, Candidate Trump will select and the Party will nominate a candidate for Vice President.

This is the one bargaining chip that leaves Trump no wiggle room.

Before you say “warm bucket of spit”, consider that President Trump (ugh!) will be 70 years old on inauguration day. Unlikely to serve more than one term. Let’s leave the speculation at that.

Even if frozen out of the day-to-day administration of the nation, a rock-ribbed conservative Vice President could significantly advance our agenda. Could even be President come 2021.

That, my Conservative friends, is what you call a bargaining chip.

How a Vice President nominee might affect the Value Proposition

To assess the value a VP candidate might bring to the ticket, one needs to take into account the chance of his (or her) ascension, and the fact that it won’t happen right away.

Let’s fantasize that a clone of Ronald Reagan exists. If he were to be nominated for Trump’s VP, his value would be represented as additive to the “today”, but waaaay to the right-hand side of the axis. Since the value is discounted, it would be a stubby little bar, but not insignificant.

5-23-2016 1-44-51 PM

It might be enough to shift the Value Proposition — the “expected value” of a successful Trump — far enough right to represent a clear choice for Conservatives, materially better than BATNA/Hillary.

On the other hand…

A neutral/moderate VP choice changes the Value Proposition not a whit.

A bad VP choice >cough< Palin! Kasich! >cough< shifts the calculation toward the abyss, to the left, wiping out any daylight between Trump and Clinton.

Then there’s this.

In Summary

  • It’s time to rethink #NeverTrump. A hashtag is not a contract or a suicide pact.
  • You don’t walk away from a negotiation early.
  • There’s nothing Trump can say, no pledges he can sign, to earn my vote. The only path to sway my vote toward Trump is with a strongly conservative VP choice.
  • If, in the end, my perception of value offered by Trump is of less value than the BATNA, I will vote 3rd party.
  • I won’t vote for Hillary Clinton. Ever. And I say this having voted for Edwin Edwards over David Duke.
  • I’ll be 60 on Election Day. I don’t have time for the long game.
  • I believe there is a very good chance that Donald Trump can win this thing. Evidence to the contrary is polling; how has that worked out for you so far? Fundamentally, Hillary is a horrific candidate. Come Election Day, I believe a significant fraction of the vote she’s counting on will vote against if they vote at all.

Parting Thoughts

Now might be a good time to review the work of Elisabeth Kübler-Ross. You know, the Five Stages of Grief:

  1. Denial (“Don’t worry, it won’t be Trump!“)
  2. Anger (most of Twitter)
  3. Bargaining (this post)
  4. Depression
  5. Acceptance

I realized I’d begun Bargaining the night of the Indiana Primary. I can’t wait to get to Step Five.


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Lessons From Two and a Half Oil Busts, Part 2

Part 2 in a series of homework reading assignments for my LAGCOE mentee. Part 1 is here.

Lesson 3 – Be careful what you don’t ask for.

I learned one thing about computers in college: I hated them. An assignment requiring FORTRAN programming meant hours spent in the campus computer center, punching 80-column cards in rigid format, hoping (usually at 3 AM) that your code wouldn’t bomb because of a misplaced comma or a semicolon. That, and the guys who worked in the computer center were, ah, uniformly unpleasant. We’ll leave it at that.

It was with that mindset that I met with my first real oil industry boss after graduation. I had been assigned as a junior engineer in the reservoir engineering group at Shell Offshore in New Orleans. My first meeting with my new boss Pat* went like this:

Pat: What kind of work assignments would you find interesting?

Me: Well, I always like to be learning new things. But whatever you do, don’t make me work with computers!


Pat promptly gave me responsibility for maintenance of MCAPE (pronounced em-cape), a massive FORTRAN program that the company used in deciding how much to bid on offshore leases. It was a complex Monte Carlo-driven program; you could tell MCAPE a few parameters and it would generate a ream of paper describing a block’s economic value, at least in Shell’s eyes. “Maintenance” meant that the program needed to be rewritten to handle new royalty schemes, taxation (including Windfall Profits Tax on oil, plus a WPT on gas that was never enacted) and federally-regulated oil and natural gas prices. Thanks, Jimmy Carter.

By the way, this happened in the olden days, before PC’s and spreadsheets.

Somehow, I made it work. Otherwise, there might have been disastrous and costly consequences for me, Pat and the company.

You know the story about the dad who teaches his kid to swim by throwing him in the deep end of the pool? Yeah, Pat had heard it too. Lucky for me, because what I needed was exactly not what I wanted.

Lesson 4 – Don’t let ’em hear you think.

This one happened after I took a new job during the 1986 bust. It’s my favorite example of how we sometimes unintentionally convey our negative thoughts.

It was my first day on the job, and my new boss Tim**, suggested we go get lunch.

We’re sitting there in the restaurant, waiting for food, and telling stories about college and high school. At some point, I mentioned something about sports, and the fact that I had played football in high school.

Tim: Did you say you played football in high school, Steve?

Me: Why, yes, Tim, I did.

{Long pause}

Tim: Was that a big school you went to, or a small school?

Me: Well, Tim, it was quite a big school. {Then, to put Tim’s mind at ease:} But we didn’t have a very good team.

I stopped short of telling Time that I had also been president of my school’s Lettermen’s Club. Good choice, because his head might have exploded. (My H.S. coach called me “Stump”. As a player I was small, but slow. But I did sell lots of popcorn at basketball games, and that’s how the club made all its money.)

Not telegraphing what you’re thinking takes some practice. Engineers are intelligent people, and the wheels are always turning in the background. But we’re not always the most intuitive people when it comes to subtle modes of communication.***

As it turned out, I worked for this guy for the next nine years, and being able to read your boss’s mind isn’t all bad. We were very different, but in a way complementary personalities. At least that’s what Myers-Briggs said. (More on that in a future update.)

* His real name.

** Not his real name.

*** My wife’s favorite joke:

Q. How do you know when an engineer is an extrovert?

A: He looks at your shoes when he’s talking to you.

I could never understand why she thinks that’s so funny.

More to come.

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Lessons From Two and a Half Oil Busts, Part 1

For the next couple of years I’ll be giving advice as a LAGCOE mentor, so I’m using this blog to collect career-advice ideas as they come to me. I am lucky to be unencumbered by a corporate HR department and am free to speak my mind. Most of this advice comes from mistakes made or observed first-hand over the last 38 years.

Lesson 1 – “College is an obstacle course.”

This is advice I got from my older brother. At the time he shared it with me, he was a CPA with several years of working experience, and I was a sophomore in college. Without his perspective, I might have quit college out of frustration.

Despite the fact that my diploma says “petroleum engineering”, my college education did not teach me how to be a petroleum engineer. College is not intended to teach you how to do a job. College is intended to teach you how to think like a person needs to think to be successful in that job. A diploma is a tool kit, so to speak, and nothing more.

Along the way, there are a million obstacles. It seemed that the bursar’s office screwed up my tuition bill every semester. That Chem lab needed to stay on track for graduation was overenrolled. The prof failed to order enough books for Strength of Materials. In retrospect, these incidents seem to have been planned to create a series of mini-frustrations. Non-academic, procedural obstacles that seemed designed to discourage the less motivated, the less focused, the easily distracted or discouraged among us.

Call it paranoid if you wish. In any case, everyone finds college frustrating; realizing that the obstacles are integral to the process helped me achieve my goal, which was getting out with a degree. In the end, the student who has the time and determination to work the system is probably better prepared to cope in the real world.

Lesson 2 – A good résumé never got anyone a job.

A good résumé can get you a job interview, and the interview may lead to a job. A bad résumé can keep you from getting that interview opportunity.

Entire books and websites tell you how to construct your résumé, so I’ll be brief. An anecdote will serve as illustration.

Early in my career, during the beginning of what was to become the Oil Bust of 1986, my boss at a small company circulated an unsolicited résumé to me and another engineer. Both my boss and the other engineer were alumni former students of the same large university that the applicant would soon be graduating.

The résumé was pretty standard in form and layout: Career Goals, Education, Honors, etc. But under the title Organizations was this little gem:

> Served as Vice-Chair of the Campus Anti-Fraternity Council.

In thirty years of looking at résumés, this one line stands out as the best example of an opportunity-killer.

Your résumé should highlight campus leadership roles. Based on my boss’s legacy with the prominent, um, paramilitary anti-fraternity organization on campus, the applicant correctly assumed that this sentiment might resonate with him. (Have you guessed which university yet?)

The red flag relates to judgment, or the lack of same, that led the applicant to boast about it in writing. On his résumé. Truth be told, I shared his sentiment, but I would never have dreamed about putting it on my résumé.

You want your résumé to be passed around. Don’t sabotage yourself by assuming that every reader shares your prejudices.

The last person a corporate middle-manager wants to hire is one who speaks/writes/fires off an email before engaging his/her brain. Don’t let your résumé undermine your effort to snag that interview.

More to follow.

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I Hate Rocky Road! (A Fairy Tale)

My favorite ice cream store started a contest to eliminate flavors one by one. By November, one flavor will be declared the “winner”, and that’s the only flavor we’ll have for four years.

My favorite freezer is on the right-hand side of the store. On the left sits a decrepit old freezer; its offerings tempt young customers and those with “special interests”; usually they are too expensive or unappetizing to me.

Several of the original flavors on the right would have been acceptable to me. Vanilla, French Vanilla, Old-Fashioned Vanilla and even Rum Raisin. Pistachio Almond — a little nutty and too green for my taste. From the beginning, Heath Bar Crunch was my favorite.

Every customer was given a vote. I knew right away that the one flavor on the right I could never bear was Rocky Road. It’s too rich, too slimy; even a small sample leaves an unpleasant aftertaste. Marshmallows absolutely make me gag. I vowed never to vote for Rocky Road.

When my turn came, I voted for Dulce de Leche, not because I thought it best but because I thought it had broader appeal and could beat whatever disagreeable flavor would emerge from the left freezer. But Dulce de Leche hit the exit early.

Ultimately, the contest came down to five total flavors. To my surprise, my favorite (Crunch! Crunch! Crunch!) was still in the running, up against the despised Rocky Road and an old half-pint of Neapolitan that, frankly, the cleaning folks neglected to throw out.

This morning I went to the shop. Rocky Road is the only choice in the freezer on the right. Right now, I’m feeling confused, angry, and betrayed. Why can’t everyone see that HB Crunch is, was, and always will be the One True Ice Cream Flavor? #NeverRockyRoad!

Hoping there to be palatable alternatives in the freezer on the left, I looked for the first time at those two flavors:

  1. From Vermont, Ben & Jerry’s Wavy Gravy: nutty, expensive, and way too pink for my taste.
  2. Hilderberry, also pink and almost certainly tainted (with listeria; target of an FDA probe that will probably never see the light of day).

While Wavy Gravy is giving favorite Hilderberry a run for her its money, all the customers expect the ultimate choice to be between Rocky Road and Hilderberry.

My G_d, what did I do to deserve the choice between a flavor I hate and one that has a good chance of killing me?

Fortunately, I have until November to make a final decision.

Cross-posted with trepidation.

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What do you buy the man who has everything?

In 1980, for his 55th birthday, my Dad asked for (and received) a truckload of composted cowsh*t. You think my Mom wasn’t a loving wife?

He’s holding a candle. Caption on the back: “Happy Birthday 1980”


Cheaper by the truckload.

Dad had a passion for organic gardening. Also for beekeeping, primitive archery, and fruit trees. He was also a homemade wine-making tee-totaler. He was a hippie before the hippies knew granola was supposed to crunch.
The story gets better. Later that same day, with the cowsh*t still in the driveway, Mom and Dad drove to the airport to pick up my girlfriend and I for her first visit to Tulsa from New Orleans. And to meet my parents for the first time.
Ninety-nine women out of a hundred would have caught two things in rapid succession: 1) a whiff of the cowsh*t, and 2) the next cab to the airport. Not Paula Demma Maley. For some reason, she saw in him a glimpse of the kind of man that I might potentially become, if I were ever to grow up. The jury’s still out on that one.
Dad turned 91 in March. He still has an itch to garden when his back and knees cooperate. He has lived in Louisiana the past 20 years, where his gardening continued and where he has been able to grow fine citrus trees for the first time in his life. He expanded his manure repertoire to include exotics like quailsh*t (quite fruitful), and he’s learned that crawfish shells make great compost.
Nana &amp; Hydrangeas

Love you, Mom.

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Wargaming #Election2016

Last fall the Presidential Election of 2016 played out in real time, right here in Louisiana. Locally, we called it the 2015 Gubernatorial Election.

My takeaway:

Given a unified party, any of the three Republican candidates would have beaten the sole Democrat in the race head-to-head. In retrospect, the leading Republican, Sen. David Vitter, had no chance of winning the general election because of his astronomically high negative poll numbers. The Dem won the general because he stood by while the Republicans carved each other up.

Continue reading

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Notes on Obama’s $10-per-barrel Oil Tax, Part 2: Ceteris Ain’t Paribus

We looked at the first red flag that Obama’s new tax proposal isn’t the result of deep thought and study in the previous installment, Math Are Hard. All things being equal, ceteris paribus as the economic wonks say, 32 billion barrels a year times $10 is a $32 billion shot in the arm for renewable energy.

But ceteris ain’t paribus. The tax would kill the domestic oil and gas industry overnight. (I get it, that’s the point, but that’s not the way it is being sold to the American public.)

Oil is a commodity. The US makes about 10% of global production, and there is a current oversupply. We cannot affect the global price. That means that any special tax imposed on domestic production is effectively a reverse tariff; the main beneficiaries would be countries like Russia, Saudi Arabia, Iran and Venezuela. Since nothing would curtail US consumption, foreign countries would enjoy a sudden windfall at US producers’ expense. Continue reading

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Notes on Obama’s $10-per-barrel Oil Tax, Part 1: Math Are Hard

Yes, I know that Obama’s $10-per-barrel tax proposal is DOA in Congress. What irritates me is that it is a thoughtless proposal, more about instigating division than about practical benefit. It is as if important policy issues have been entrusted to children, or worse, Internet trolls.

A few years back, I had a colleague who was good at identifying oil prospects, not so good at evaluating them. He’d say,”My prospect could hold 250,000 barrels of oil. That’s $25 million worth!” While that statement is superficially true, it’s also intellectually lazy because it fails to take into account the myriad costs and risks of an oil-drilling venture. (God made petroleum engineers to keep geologists honest.) Continue reading

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