Russ: Welcome back to The BusinessMakers Show, brought to you by Comcast Business, built for business. Coming to you today from the campus of the University of Houston where my guest is Dr. Joseph Pratt, Cullen Professor of History in Business; Joe, welcome to The BusinessMakers Show.
Joe: Nice to have you here Russ.
Russ: You bet. So you focus on business history and quite specifically on Houston, is that right?
Joe: Houston and the oil industry yes. I’ve spent since my senior thesis at Rice I’ve been writing about the oil industry. I wrote a history of my dad’s union, the OCAW, for my senior thesis at Rice and every time I had a choice when I was in school to write about something I chose the oil or gas industry and suddenly I was being introduced as one of the leading historians of oil. And I was a little embarrassed and then I realized there were only about five of us so I probably was in the top five at least.
Russ: There you go. Well congratulations for that.
Joe: It’s something.
Russ: So if you’ve been focused on that industry that long, my goodness, the last 5 years have been pretty extraordinary.
Joe: I’ve never studied or watched anything like it in my history as a student of the industry, it was so unexpected. Even Spindle Top was expected; we were refining oil in other parts of the nation, we were refining oil in Corsicana, Texas. The scale was stunning but even Spindle Top was kind of anticipated, the shale revolution is just stunning. It’s surprising and we’re still trying to figure out what to make of it yet.
Russ: Well, as you know I do The EnergyMakers Show too and I can’t tell you how many interviews I started off over there for the last 2 years with why aren’t we having a national celebration. I mean the energy crisis was real, peak oil seemed real, we were building these huge LNG importing facilities and before we could even import any we started turning them around; it just extraordinary.
Joe: Well I had the privilege in life of knowing George Mitchell, not as a close friend or anything but as a working partner on a couple of small projects; he was an extraordinary man and I think he’s kind of my symbol now of what entrepreneurship can be and what a broad thinking businessman con do. He was an amazingly decent man in the bargain also.
Russ: I think I really tried to get him on the show and one time got close but I wasn’t quite up to date on his age at the time and his assistant said well he is 94 now and I went oh, okay, but I think he lived long enough to know that it was panning out like he thought shale production could pan out.
Joe: Wouldn’t that be something to know?
Joe: He spent his life in that same Barnett region finding natural gas the traditional way. He was certain that the shale could be cracked, fracked, whatever it going to take and he just did it. And he was not all alone but he was pretty lonely in that view, including people in his own company, and he had the great strength of being able to do what he wanted because he had made himself wealthy in the traditional natural gas industry and he was going to show that what he thought could be done could be done. It was kind of the glory of entrepreneurship; you’re certain of yourself and you throw yourself into it and it’s particularly good when it works. And his certainly did.
Russ: Absolutely. Well and he’s played a huge role in essentially making Houston, Texas the energy capital of the world which probably puts focus on what you do and the history of oil and gas and Houston. There’s a lot of innovation and entrepreneurship that’s taken place here, right?
Joe: A whole lot and a whole lot of it is tied to the oil and gas industry. So I’m trying to think or eras – I’m trying to think of big impacts in different eras; you start with the Spindle Top boom in 1901, the first decade of the 20th century where the city becomes the center of the Texas oil industry which by 1915 or so is the center of the oil industry already. The Southwestern U.S. becomes the equivalent of Middle Eastern nations for about 50 years and Houston is ideally situated because I call it the hole at the end of a funnel of pipelines. The pipelines coming to the Southwest, knee deep water, they need refineries and Beaumont to the Houston Ship Channel becomes the place of choice for that investment. So there’s a lot of opportunity to innovate in Houston; there’s a lot of creative people. There’s kind of a – it’s not wild wets, it’s wild Southwest; it’s people who have an entrepreneurial spirit who believe in taking risk and there’s a lot of really good risk to take in our area for all those years.
The second big era is with the offshore revolution and, you know, New Orleans is the center of offshore exploration and production for a while but gradually it consolidates in Houston. And then finally of course the third era we’re in right now and that’s the shale revolution and I think somewhat we are becoming the center of the shale revolution because so many of the companies are here, because so many of the processing plants, the innovators, the engineers, the scientists are here and there’s not much other direction for it to go. So it will come this way, it might end up from Corpus Christie upward but it’ll come this way.
Russ: Even though I guess the closest shale production might be a hundred miles away from here.
Joe: Might be a hundred miles away, we might be sitting on it we don’t’ know, way down deep under U of H.
Russ: You know I get excited about the energy business in Houston. I think there’s some people, particularly younger people, that don’t fully grasp the importance of energy and the whole global economy. I mean it drives it since the industrial revolution and so being in the energy capital of the world means a whole lot.
Joe: Well we start with the job market and say if you’re going to work in Houston it would be good to know what is essentially the second language of our region which is energy; oil and gas and energy in general.
Joe: Students are very interested in the environmental impacts, they’re very interested in alternatives to oil, which is great. We can attract them to the idea of energy. We are on a crusade here in a variety of ways on our campus to increase our recognition as the best place you could find to learn about energy and environment and that’s a good selling point and it’s true and we’re making good progress with that. I’ve been here 30 years at the University of Houston, 5 years before that at A&M, and it has always appalled me at how little most of our students know about energy when they get here with parents who work for oil companies, with all kinds of reasons to know about it. I’ve spent the last 10 years or so saying one of my missions is to educate people, young people, about energy and they want to know about it because they don’t know where to go to get it.
Russ: Well great, I love that cause. I mean I think that when you look at the importance of the energy industry, particularly oil and gas, and that it’s sort of not talked about very much and hardly ever favorably, and yet they pay huge amounts of taxes, hire lots of people and keep our lights on and our cars going too.
Joe: Well I’m very keenly aware of that. My family comes from farming families in Beaumont and Hemphill up in East Texas, my dad was a 7th grade dropout, wounded World War II veteran who took a job because he could get it in a petrochemical plant in Port Nueces, Texas where I grew up and worked there till he died. And because I had a lot of uncles – you know farming families – had a lot of uncles I could always get on at one of the plants around the region in the summers when I was at school. So I started kind of from the ground up in the labor gangs of petrochemical plants and you do, particularly sitting on graveyard shifts in one of those plants, it is almost a mystical place. It might smell a little bit, we were used to it, it was a long time ago, but there’s an energy flowing through that; it feels almost mystical. Almost like a – and students would laugh at me because they always do – it’s our equivalent of a cathedral of this technology and the kind of things that you have to do to create the products we do out of crude oil and natural gas. And I come by my interest honestly, I’ve studied this all my life and haven’t reached the end of my interest yet, particularly with the shale revolution.
Russ: Cool. Well at the refineries and the petrochemical plants there’s a lot of innovation and entrepreneurialism that takes place there as well, right?
Joe: There’s actually an energy field now in the history profession and I’m one of the early members of it and one of the things I’m talking to the people who study coal about, the missing ingredient is coal and one reason oil so relatively quickly came to dominate coal is that…
Russ: Missing in that it’s not taught or included in history.
Joe: Well no, the missing thing in coal and the industry is the equivalent of a modern refinery.
Russ: Right, okay.
Joe: The modern American refinery since the 1920s have really been steadily innovating. They captured more and better gasoline per barrel of oil when the government in 1970s and 80s and 90s demanded cleaner gasoline they found it – found ways to do it; more additives. We take them for granted because we never go in them.
Joe: They’re fenced off, they look the same 50 years ago as they do now almost on the same sites. The industry will say we haven’t had a green fill refinery since the 1970s; kind of true but the truth is they’ve been rebuilding existing refineries over and over with new technology. They can do amazing things with molecules of oil and gas in those complexes that are both refiners and petrochemical plants.
Russ: Right, really interesting. We don’t hear that vey often and we don’t hear about them at all unless there’s an accident.
Joe: Yeah, an accident…
Russ: And you hear about them. And there are accidents, I mean it’s some dangerous stuff; it happens in some. I recently had the guys from Sage Environmental on The EnergyMakersShow and they inspect and monitor refineries and petrochemical plants and I just sort of laid that out for them, yeah that’s pretty dangerous and he went well it’s dangerous to drive on the highway and that’s more dangerous than these places. But they said American refineries and petrochemical plants are far and above the safest places on the planet that do that kind of work.
Joe: I would certainly assume that’s true. On one hand that’s the industry, on the other hand we do have strict government regulations that as much as people in industry criticize the Environmental Protection Agency – we have OSHA and the EPA’s creation in 1970 revolutionized the plants that my family all worked in in terms of safety, health and environment. The companies then pushed beyond the law when they can but certainly different places than they were before the creation of EPA and OSHA. This combination is what we need; we need a government capable of regulating and strong enough to enforce regulations and then strong enough to back away and say within this circle industries are free to experiment and do what they need.
Russ: Right, really cool. So before I let you go I know you’re also out here championing a cause of kind of a new minor, an energy and sustainability minor; talk about it.
Joe: Well we decided 2 or 3 years ago part of the U of H energy initiative we needed to collect some of this knowledge, to get to know each other at the professor level, and part of that when we got to know each other better we also understood that we shared a lot of students – or that our students shared a lot of interests between the sciences and the humanities, economics and engineering and business – and also between the kind of twin issues of energy and sustainability. So we put together this minor, I think I was the available person because I have a joint appointment.
Russ: But you knew the space too.
Joe: Well I knew the space but with a joint appointment I had a little more flexibility in what I could teach because somebody had to be able to teach these courses and get credit for it and hone discipline, so I think that was my highest qualification is that I could actually teach the introductory course. But it’s been a ball and the students have really come to it fast, quickly in big numbers.
Joe: And the great thing about it, we all know as teachers – university teachers – big state university teachers in particular – we all know that we need to go across the little silos that we live in and if you want – we call it interdisciplinary teaching, which it’s so obvious when you start doing it – that it’s good for students to be in the room with other disciplines from other majors; the arguments, the discussions in class get a lot more interesting, a lot livelier. We do group projects and we try to put the business and the engineers and the historians and the architects in a group – right – which is how they’ll work in a lot of what they do in life. So it’s been a lot of fun for me and I think for many of the faculty members who are part of it. We’re going to have a meeting later in the day where some of them are going to show off their project, the other students.
Russ: Cool, really cool.
Joe: It is. One of the energetic centers on campus right now is energy and sustainability minor.
Russ: Really neat. Well Joe, I really appreciate you sharing with us some time today.
Joe: Thanks for coming to U of H Russ.
Russ: You bet. And that wraps up my discussion with Dr. Joseph Pratt, the Cullen Professor of History in Business here at the University of Houston. And the BusinessMakers Show, brought to you by Comcast Business, built for business.
brought to you by