What will happen to energy bankers in Texas if the Oil & Gas industry dies over the next 10-20 years? (Just a hypothetical situation) I'm planning on going to get my MBA in Texas (Rice) and want to know what my career options are if I start in Energy banking. Well, I was accepted and now I want to make up my mind. What are exit options? Would those bankers transition to alternative fuels?
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Seriously won't happen
10 years down the road, cars will be at least more gas efficient, if not electric. Lets just say people keep their cars for around 10 years (which I know most don't even keep them that long) and then you have everyone buying new electric or used gas efficient cars. Supply builds up, demand decreases. 10 years later it happens again. While not likely, it is a possibility. This is just a simple example of something that could happen over the next 50 years, at least. Maybe not in that exact way, but again, this is a hypothetical situation. I am just wondering what happens to Energy bankers then.
Even if this doesn't happen, what are exit options for Energy Bankers?
Well the average time a person holds a car is 12 years so you may not, but most of America does.
Congrats on getting into Rice but thinking that O&G is all about gasoline for cars is shortsighted at best. That's a smal part.
You can get 20 gallons of gasoline out of a barrel of oil, maybe 24 max if the refiner is really good and advanced. So that leaves about an additional 20 gallons of petroleum products from a barrel of oil and you could optimize some of the reduction to make other products should gasoline consumption fall. If the US, due to CAFE standards and other factors, was somehow able to cut gas consumption by half, then that would just mean that we become a net exporter even more quickly and export to countries that don't really care about the environment to much like India and China, where there has been and will be a massive increase of autos sold in the near and more distant future.
For natural gas, the US generates more power through NG fired plants than any other resource (coal is a few percent behind but declining). NG burns extremely cleanly and has a higher energy density. We are currently building all kinds of NG plants in the US because it's so dadgum cheap. When the price comes up, we'll just go back to drilling for more.
The reason that shale is affordable is because you get both oil and NG out of a typical well meaning that we can produce in the Permian at a much lower cost than almost anywhere around the world, and we don't have to fund our country through oil unlike Saudi, Norway, Iran, etc. While prices at $30 are bad for the O&G business here, it will drive everyone else out first so we don't have to be the ones to flinch.
On top of all that, as the North America so almost energy independent, the US produces 100% of NG needs and 80ish% of oil where we then get an additional 12ish% from CA/MX, if and when O&G consumption gets more efficient, not decreasing really, we can really start to export LNG to Europe where we can sell it at a premium compared to Russia since we are reliable and won't turn off our pipeline when we feel like it.
This business is constantly changing. There's always someone who says that we're almost out of a resource and then scientists and engineers figure out a new method of E&P or another use for a product. If you think that that innovation is going to just stop, then don't get into energy. If you think that this dynamic industry that is the backbone of the world is not going away anytime soon, then it's a great time to join.
You should probably know the first thing about the industry if you plan on changing the trajectory of your life by going to Rice and becoming an energy banker.
It's interesting because a few years ago I kept reading about $100 oil forever. A few years/decades before that I read about peak oil. Now I read about the downfall of oil and it being $20 from here to eternity since we're all going to have cars run by Mr. Fusion trash powered generators. O&G aren't exiting the scene anytime soon. Will it be different? Yes. But it'll still be here.
That said, the next couple of years may be a bumpy ride.
Exactly ! And the way the new energy source is getting popular in the world, it seems that the next 50 years have not gone anywhere.
Does anybody know how houston oil and gas banking recruiting went this year? A lot less spots?
I'm sure the industry will be fine in the long run, but I would be cautious about the next few years. Posted this in the other thread, but am not sure if banks can sustain themselves on restructuring alone. At least in my industry it's generally pretty low fee, and these days law firms are actually doing many restructurings without help from banks.
Not sure about that...
Advising on a restructuring usually generates a pretty fat financial advisor fee, especially if you're on the debtor side.
so you think layoffs are imminent?
RX could be a solid gig for the next 5-10 years out of Houston. Or just wait until LNG decouples from brent and the gulf coast is awash in a of sea cheap vehicle/boat fuel with comparable fuel density to diesel. Sorry R&M your run is over soon.
Wouldn't be worried about being in energy banking over other industries s going forward. Oil and gas prices are both unsustainably low and although clearly debt issuance was overdone from 2012-2014 in the space this doesn't mean everything is being liquidated. There is still a lot of work to be done.
With all due respect, it's either hypothetical, in which case you don't need to worry about your exit options, or it isn't.
Oil and gas is here to stay for a long time - enough for your career. Will you have a good career if you rely only on WSO advice and forgo learning via own research? - I doubt it.
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