Switching Horses on Oil Strategy

The WSJ reports on big oil's quandary...can't make new capital investment in exploration cause it just don't pay...

Thunder Horse, which started up in 2008, will provide 42% of BP's incremental upstream production over the next three years, according to analysts at J.P. Morgan Chase. Unfortunately, it is also one of BP's few discoveries of such scale in recent memory. Neil McMahon of Sanford C. Bernstein calculates that less than half of BP's additions to reserves over the past five years have come through its exploration efforts.

Malcolm Gladwell on Underdogs and Inliers

Malcom Gladwell is an author I enjoy greatly. And I recently found two pieces of his that are worth your time. One is about achieving success as an underdog. The next is about successful people who get missed by the media - "inliers" in his vernacular.

From the New Yorker:

Insurgents, though, operate in real time. Lawrence [of Arabia] hit the Turks, in that stretch in the spring of 1917, nearly every day, because he knew that the more he accelerated the pace of combat the more the war became a battle of endurance—and endurance battles favor the insurgent. “And it happened as the Philistine arose and was drawing near David that David hastened and ran out from the lines toward the Philistine,” the Bible says. “And he reached his hand into the pouch and took from there a stone and slung it and struck the Philistine in his forehead.” The second sentence—the slingshot part—is what made David famous. But the first sentence matters just as much. David broke the rhythm of the encounter. He speeded it up. “The sudden astonishment when David sprints forward must have frozen Goliath, making him a better target,” the poet and critic Robert Pinsky writes in “The Life of David.” Pinsky calls David a “point guard ready to flick the basketball here or there.” David pressed. That’s what Davids do when they want to beat Goliaths.

From Sports Illustrated:

Nick Faldo [is a golf inlier]. Think about it. He wins six majors. He's the dominant golfer of the late 1980s and early 1990s. But we don't mention him in the same breath as, say, Arnold Palmer, even though Palmer only won one more major than Faldo. And why? Because Palmer had Nicklaus and Faldo had, well, Scott Hoch, Mark McNulty and John Cook. Now imagine he comes along in the late '90s and goes toe-to-toe with Tiger Woods from the beginning. All of a sudden Faldo gets immeasurably magnified by the comparison. I'm not saying he'd beat Tiger. (Are you kidding?) But he's the perfect foil. I got a tape recently of the 1996 Masters, when Greg Norman had his epic collapse on the back nine. That tournament is always explained in terms of how Norman choked, as if there were something inside him that inevitably caused him to surrender a six-stroke lead. Nonsense. Surely the key to that whole collapse is that he's paired with Faldo, and Faldo in his prime was terrifying. He was surly and tough and charismatic and emotionally and psychologically bulletproof, and I feel like he'd do a better job of getting under Tiger's skin than anyone out there right now. What's the defining fact about Faldo? His ex-girlfriend once destroyed his Porsche with a 9-iron. The corresponding fact for Woods is that his favorite band is Hootie and the Blowfish. Hootie and the Blowfish? What's Faldo's favorite band? Joy Division? Or some kind of obscure Welsh thrash band too hard core for American radio?

Peak Oil Update

Here are three presentations by Matthew Simmons, the Twilight in the Desert guy.

Mr. Simmons is a big energy bull. The jury is still out as to whether he is full of bull. But his presentations are quite compelling.