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I have never heard an oil executive recite poetry in a board meeting. But that's not to say it hasn't happened. Nor does it suggest that wise words can't come from literature.

Samuel Dodd wasn't known to be a great bard, but the American oil pioneer has been credited with inking the first poem about life on the rigs. His verses from 1860 speak to the struggle of making money in an always-unpredictable business. Dodd's eerie words are familiar and any oil company chairman today could lead the board agenda with a few lines like:

The engine stands all idle now,

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The heavy auger beats no more,

And must a well of so great cost,

Be given up and wholly lost?

Today's circumstances have a Doddsian feel; the industry is caught in a price war, a siege battle where wells of so great cost are being given up and wholly lost. Rigs across the continent are idling their engines, pulling up their drill bits, and laying down their masts. Last week, 84 more U.S. oil rigs silenced their beat, taking the active oil rig count to 34 per cent below the 2014 highs.

John J. McLaurin, oil historian and author of the classic book, Sketches in Crude Oil, published Dodd's poem in 1896, during a period of brutal volatility in oil prices; fluctuating from 60 cents a barrel to $1.40. McLaurin's contemporary description of the late 19th century oil business resonates in today's market: a downturn in demand due to economic slowdown, a surge in global supply and a handful of powerful competitors vying for lucrative market share. Some people equate the 2014 price crash with 2009. Actually, it's more reminiscent of the 1890s.

The characters in today's oil price drama are royal families in the Middle East, entrepreneurs in the United States and oligarchs in Russia. Oil was also a family affair in the late 19th century; the rivals were the Rockefellers, the Rothschilds and the Nobels. The latter two European families were investing in Russian oil production and distribution, while the Rockefellers upheld American interests.

Oil was commercialized in Canada and the U.S. in the late 1850s, but by 1885 the entire North American industry was under siege. Half way around the world, in Tsarist Russia, explorers drilled for oil in Baku, around the shores of the Caspian Sea. Some of the finest oil-bearing geology in the world was brought to market.

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Sweden's Ludvig and Robert Nobel backed investment in oil wells, refineries and distribution – allowing Russian oil to reach Europe. And, the Rothschilds of France spent nearly $10-million to complete a railway from Baku to Batumi on the Black Sea – a supply line that pitted Russian oil against U.S. exports. Within six years of Russia's oil discoveries, America's global market share fell from roughly 85 per cent to close to 50 per cent. At the time, the Russians had clear competitive advantages over the U.S., including prolific production and better access to both European and Asian markets.

American wells of "so great cost" were succumbing to competitive pressures during this full-on price war for global market share. But the battle did turn. "Russian competition, the extent and danger of which most people do not begin to appreciate," noted McLaurin in 1896, "was met and overcome by sheer tenacity and superior generalship."

The general was Standard Oil's John D. Rockefeller, a ruthless competitor. In order to compete with the Russians, Standard built a large fleet of tanker ships, brought on chemists to more efficiently refine petroleum products from a barrel of oil, and most importantly lowered all costs in order to win back their lost share from the Russians. McLaurin commentated that: "The Standard Oil Company, unrivalled in its equipment of brains and skill and capital, not merely breasted the storm successfully, but did more than all other agencies combined to avert widespread bankruptcy."

Much has been written about Rockefeller and his Standard Oil in the intervening years, but this brief anecdote raises the question: "Where is the generalship to fight an oil price war today?" Too often, the opening agenda item in a boardroom is a discussion of when oil prices "are going to turn." That's important knowledge, but says little about competing to win the long game of ups and downs.

Not once in Dodd's ode to the oil field does he mention that the price of oil was the root of an operator's problems in tough times. Both Dodd and McLaurin remind us that winners of price wars don't fight on price. They fight on cost.

Peter Tertzakian is chief energy economist at ARC Financial Corp. in Calgary and the author of two best-selling books, A Thousand Barrels a Second and The End of Energy Obesity.

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