A Report On The Oil Crisis Essay
The oil crisis began in October 1973 when Arab oil producers imposed an embargo. As a result the oil prices rocketed from $3 per barrel to $12 by 1974. This disaster was followed by the second energy crisis in 1979. At that time Pierre Wack (1922-1997) was an unconventional French oil executive who developed the scenario process. His success in scenario planning enabled the Royal Dutch/Shell oil giant to anticipate both of these oil catastrophes.
Pierre Wack agreed that straightforward forecasts may be very accurate, however he believed that is why they are dangerous. As Peter Drucker said, “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.” (Harvard Business Review, 1985, p.150) Such forecasts are based on the idea, that future will remain same as today. So, in the period of an unexpected turbulence forecasts may lead a company to a dead end. Pierre Wack believed that the solution to the problem does not lie in improving the forecasting techniques, but rather in accepting a chance of uncertainty in them, understanding of the uncertainty and making this uncertainty a part of the reasoning. Our world had become no longer as predictable as it was before. Pierre Wack argued that one of the best ways to manage the uncertainty of future events is the use of scenarios.
“Scenario planning (sometimes called “scenario and contingency planning”) is a structured way for organisations to…