Price of Oil - Avoiding Common Pitfalls During an Industry Downturn
Keeping Your Head When Those About You Are Losing Theirs – Avoiding common pitfalls during an industry downturn
During the oil and gas downturn of the mid-1980s, a bumper sticker was seen in Texas and Louisiana: “Please, God, grant me one more oil boom and I promise this time I won’t blow it.” But of course, there were more booms, and most people still blew it. The industry seems to be incapable of learning from history. When oil & gas prices are high, companies behave as though the good times will never end; when prices drop, companies slash costs and payrolls as though prices will never rise again.
Much of this behavior is driven by shareholder expectations. However, there are a number of common pitfalls in logic and decision making that can and should be avoided during a downturn. These include:
- Adopting a gambler’s attitude toward risk
- The endowment phenomenon
- The immediacy phenomenon
- Considering sunk costs when making decisions
- Seeking validation
- Falling into Groupthink
- Excessive risk aversion
- Failure to consider competitors’ perspectives and possible actions
- Embracing and implementing the first potential solution that presents itself
This talk will explore these traps and discuss how to avoid them
Location:
Texas A&M Mays Business School at CityCentre
842 W . Sam Houston Parkway North Suite 200
Houston
,
TX 77024