A Tale of Two Industries: Oil vs Automotive Sectors

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Much is made of the auto sector in both the US and Canada.  It is thought of as the manufacturing heart of both countries and is fundamental to the ongoing success of the economy.  On the flip side of that, the oil and gas energy industry is socially and politically considered far less important.

The energy industry is seen almost as a utility; something that is always there and does not require much attention whereas the auto industry is perceived as a fragile egg with historical roots that must be tended and cared for.

We decided to look at the numbers and found that compared to the auto sector, the energy industry is about 10 times larger in Canada and about 5 times larger in the US:

Click to Expand Graphic

2018 GDP By Industry in Canada & the United States

Given the giant scale differences, our team decided to brainstorm on the question of why perception differ so much from the reality.  We came up with:

  1. Sexiness:  The car industry is sexy and the oil industry most definitely is not.  How many movies have you seen about cars, car companies and car executives?  Now compare that to the number of Hollywood blockbusters about oil companies… zero; unless you consider 2016’s Deepwater Horizon BP Oil Disaster Movie.
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  2. Tactileness: People feel cars; they open their doors, they clean them; they lovingly put their families inside them.  The only time most people touch oil and gas is when they spill it.
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  3. US and Global-Automotive-Ad-Spend-Mar2019Advertising: Autos are constantly promoted in a positive light whereas the energy sector is only advertised in boring gas stations placements.  Shown here is a graphic of how much the auto industry spends on advertising, but after an extensive search we could not even find rough estimates on what the energy industry spends, likely because it is so small.
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  4. Asset vs Liability: Autos are an asset to be purchased and resold where as oil and gas are a weekly / monthly annoyances taking hard earned money out of your pocket.
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  5. In Fighting: One auto manufacturer rarely argues that a different manufacturer is unethical or dangerous but in the energy sector this happens all the time.  For instance, the natural gas industry wants to replace coal and (correctly) vilifies coal in the media and with politicians and in-turn the coal industry talks about oils spills
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  6. Competitiveness: There are nearly 300 different makes and models of cars for sale in the US today, but you only have a dozen gas stations to choose from and your utility company is a monolithic inflexible non-choice.  Gas is talked about as being a rigged market which screws-over consumers.
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  7. Visibility of Failures: When a car has a problem, there is a recall that might get a brief mention on the business news.  When the energy sector has a failure, it makes for great television.  Explosions and oil spills can be shown in pictures and videos on the prime time news and in social media.
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  8. Unionization: The auto industry is heavily unionized but the only unions you will find in the energy industry relate to coal mining or oil refineries.

This last point, unionization, deserves some additional attention.  Whatever you may think of unions, one thing everyone can agree on is that they are loud.  The yell and scream, jump up and down, demand and receive bailouts, block traffic, strike, disrupt business flows, demand and receive serious media attention.  Unions are a highly effective advocate for the importance of their sector, even in the face of evidence to the contrary.

The oil industry relies on oil executives to carry their positive message of employment, environmental stewardship and improving the globes way of life.  Human health, personal income and even education are all highly energy based, but the connection between energy and these critical life facts is not a straight line.  The last time you saw an oil executive talk was likely in DEFENSE of something at a Congressional hearing.  This is not a positive forum to convey any message and it is easy for media shy executives to say the wrong thing at the wrong time:

Even when the auto sector is covered in a negative light, the public discussion often centers on a hard-done-by average Joe who just wants to feed his family by getting a living wage for making a product you love.

There is an old adage in advertising which says, “Don’t sell the steak; sell the sizzle”.  Cars sell sizzle.  Oil and Gas sell burnt steak.

The energy sector has flown under the radar of most citizens for its first 100 years but now needs to be do what the auto industry does, shameless self-promotion.

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