A June 3, 2015 column published in the Wall Street Journal caught my attention. Greg Ip drew parallels between American shale startup producers and Silicon Valley and contrasted those characteristics with the OPEC cartel and other large oil-producers. I’ve summarized those traits in the table below:
Greg goes one step further, and I have amplified his point below, related to one past experience I lived through . . . Once the flood of money that financed the telecommunications sector in 2001 dried up, many startup service providers (especially CLECs) and equipment startups filed for bankruptcy or were acquired for their fiber optic assets. As Greg Ip points out, “Something similar may soon happen to the more indebted, less profitable shale operators. The industry, for all its similarities to Silicon Valley, is much more capital-intensive.”
But all is not gloom and doom for American shale producers. Like those startups in the telecom market that spawned E-commerce and nurtured the growth of the Internet during the late 1990s, they not only survived the dot.com bust and telecom collapse, they thrived. The same can be said of the innovations introduced by America’s shale oil producers: Like telecom startups that changed the face of optical transport and telecom with the introduction of the Multi-Service Provisioning Platform (MSPP), during the 2000s, “OPEC’s world will never be the same.”
But all is not gloom and doom for American shale producers. Like those startups in the telecom market that spawned E-commerce and nurtured the growth of the Internet during the late 1990s, they not only survived the dot.com bust and telecom collapse, they thrived. The same can be said of the innovations introduced by America’s shale oil producers: Like telecom startups that changed the face of optical transport and telecom with the introduction of the Multi-Service Provisioning Platform (MSPP), during the 2000s, “OPEC’s world will never be the same.”
You can thank American innovation for both lower telecom costs, a legacy of the late 1990s, and reduced gas prices at the pump today.