Boom Brands

I just got back from the Permian Basin and the joint is jumpin’. Barbara and I traveled up to Denver on US 87 through Amarillo and back to Houston through eastern New Mexico to Fort Stockton, then I-10 homeward. I don’t think we drove from one horizon to another without seeing at least one workover under way, sometimes more. Probably isn’t a single truck-mounted rig or vac truck west of the Mississippi that’s available for new work.

At yesterday’s close, oil is $127 a barrel and gas is $11.70/MMBtu. Activity is up everywhere, from the Permian Basin of west Texas to the Barnett Shale of north central Texas and eastern New Mexico as well as in the dusty Panhandle and the Anadarko Basin of western Oklahoma. With so much money on the table, you’re looking at recompletions, infill drilling, installation of secondary recovery projects – and everything else that’ll squeeze more oil and gas out of existing reservoirs.

For energy-related brand-watchers, it’s a boom time. It’s no surprise to see the “bigs” like Schlumberger, Halliburton and Baker Hughes.

But, e.g., I ran into a long-time colleague at OTC: Donna Smith is now Director of Communications for Stallion® Oilfield Services. Having thereby raised my consciousness – and thanks to her efforts for the company – I must have spotted every orange-and-black Stallion logo-ed vehicle and field office from Centerville (outbound) to Ozona (inbound). Key® Energy Services is out there in strength. There are hundreds more contractors and subs out in the field right now and you can play a sort of drive-by brand bingo on the roads out west.

Reading the papers, you’ll recognize that everyone is unhappy with the cost of oil or – more critically – the price of a gallon of gas at the corner station. I’d ask you, as marketers, to think about our “situation” from several, quite different angles.

First, the economic impact of oil and gas prices is creating opportunities for companies (and their employees) nationwide. That’s an economic good…as well as a particularly fine time for strongly branded firms with long-established customer relationships.

Second, this in an excellent period in which you should be building on and communicating the positives of your energy business brand. Let your stakeholders know if you are, in fact, doing well – and why. You’ll be creating a foundation of good brand impressions for the down cycle if and when it comes.

Third – and this is a personal note – maybe once time soon some oil company executive will stand up and ask Dianne Feinstein, “Just what, Senator, is your problem with the concept of profit?”

That’s enough for one weekend. All the best for a great June!

Any omissions or errors are my own. Photo © Jim Parkin Dreamstime.com

Barilla Condemns

It must be true, because I finally read the words of Guido Barilla himself. He’s the Chairman of the 130-year-old Parma, Italy-based company that happens to be the world’s largest producer of pasta. And if I get him in trouble with the US side of the firm and its ad agencies, hard wheat.

Referring to a box of the company’s penne – and responding to an immense outcry among the Italian people over the in-store price jump of pasta throughout the country – he noted that one of the reasons that prices are going up is because of the growing use of agricultural crops to make…ethanol. “Agriculture for energy is an extremely stupid thing.” (You can read more about the outrage in Fortune.)

Here’s total disclosure: I work for clients in both the hydrocarbon and ethanol sectors. But having a wide variety of resources available for review, I have to say that using American corn to produce ethanol for our vehicles is precisely what Barilla says it is.

Our food prices are going up. And every bushel of corn that’s diverted from our food chain to make ethanol means that our food is going to cost more. Yep – it’s very admirable that the gas pumps in Bellaire, TX, dispense E85, the “magic” mixture of hydrocarbon-based gasoline and corn-based ethanol. Yep – it’s terrific that there’s an entire energy sector out there in the heartland, represented by blenders like POET LLC that have devoted themselves to alternative energy.

Ethanol is a poor energy source – it doesn’t come close to providing the power of hydrocarbons. And even though it burns poorly, it consumes other natural resources really well. An ethanol production factory requires huge amounts of water; a new one being planned for Tampa, FL, is on record requesting the use of 400,000 gallons of city water per day.

Ethanol is only an alternative energy source only because you and I are paying for it through the nose.

My colleague Rob Schoenbeck is preparing an area51 insight – I’ll let you know when it’s up. He notes: Follow the money. Huge subsidies, huge profits, lots of votes. The politicians (Dems & Republicans alike) are all for it. They’re doing the math. In 2006, the Feds paid ethanol blenders $2.5 billion and ethanol corn farmers $0.9 billion. We paid an extra $3.6 billion at the pump. The total was $2.21 extra per gallon of gasoline replaced. Of all that, $5.4 billion went for windfall profits, creating what USDA’s chief economist called ethanol euphoria.

I have been marketing in the energy sector for years; It is difficult to make any kind of case for food-based alternative fuels.

Some industry marketers have suggested that a balanced approach to future energy sufficiency is critical. I agree. But not perched on the back of everyone who benefits from our food chain – and that would be...everyone. No matter how much of a glow you get from the ethanol alternative fuel concept, I’m on Signor Barilla’s side: Pasta to the People!