How will returning to the office impact energy? – And your pocketbook?
Part of the Covid recovery is the return to a "normal work-life" defined by the pre-Covid work environment. But at what cost? Employers have one expectation, and employees have another.
As a business owner of an oil and gas company, it has always been about showing up. Wells don't drill themselves; not all employees can work from home.
When Covid hit, the oil demand went down dramatically, and our rig counts cut to the bone. OG companies laid off employees left and right and put rigs into cold storage.
When large equipment goes into cold storage, it doesn't get back into the work schedule for free. There is a tremendous cost to getting the equipment tested, re-certified, and re-hiring the employees with the required skill sets.
Thankfully though, Covid has run the bulk of its course, and this newfound oil demand is here to stay. The graph below shows the world demand through 2026 increasing even as there are increasing investments into renewable energy; it also considers the impending demand destruction from the high diesel and gasoline prices.
The Bottom Line
I believe the new "norm" has not been established yet. There are too many variables to count, and several have yet to play out. High energy prices are one of those variables.
With oil and gas, capital for drilling and increased CapEx programs are becoming more readily available in the market. The commitment of oil and gas companies to return profits to investors and increase production is being played out. With our operations side getting every drop of oil to the market, our stakeholders and investors benefit from the increased oil prices.
The new norm for the office is still yet to be determined. The New York Times published an article on June 9, 2022, titled "A Full Return to the Office? Does 'Never' Work for You?". The article covers the fight between employees and their employers on working from home or the office. Some of the main points are the rising costs of gasoline, transportation, and childcare, as well as the overall reduction in disposable income.
"What is abundantly clear is that there are fewer and fewer companies expecting their employees to be in the office five days a week," said Brian Kropp, vice president in Gartner's human resources practice. "Even some of the major companies that came out and said 'We want our employees in the office five days a week' are starting to backtrack."
Estimates from 80% of employees returning to the office are now going as low as 50% and even 20%. Either way, only time will tell what the average post-covid workplace looks like.
For the King Operating Corporation, it has been fun to see the change in our office post-Covid. Positively, our new management has taken working from home off the table and has increased productivity through several positive best practices. Placing further training, policies, and rewards have been most effective in the office.
Our deliverables to our investors and employees have increased, and both are seeing the financial rewards. There is no mistake, I always have been a fan of the office interaction and learning from each other, both in success and failure.
We are about to close our current fund for drilling and have even bigger plans already rolling for the next fund. This is made possible by the King Operating Corporation employees in operations, sales, and marketing. They are helping set the new "norm" by achieving goals and delivering returns to our stakeholders.
As always check with your CPA if alternative investments are good for your portfolio
Please reach out to our team at any time for answers to your questions.
Jay R. Young, CEO, King Operating
ForbesBooks Author of “The Upside of Investing in Oil and Gas"