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Today is story time! This blog details a time in my life that was both magical and irrational!
At the time I graduated from the Louisiana State University School of Dentistry, I had not made a final decision on where I would locate my practice. I had narrowed my practice choices to three different locations in the state of Louisiana.
The year was 1978, and my choice for a practice location was a small community in the southern part of Louisiana named Morgan City.
Even though Morgan City was only a dot on the map, in the late 1970s it was the epicenter of the Gulf of Mexico offshore oil industry. It was a crazy place in which to live in the magical time of the late 70s.
Just like in the movies, it was not uncommon to see a helicopter land in the middle of the town and have three or four businessmen in suits get out of the helicopter and into a luxury vehicle headed to a business meeting where a multi-million dollar deal was made.
Morgan City was not Shangri-La, but it had many similarities. Morgan City is moderately isolated, having only marsh and the Gulf of Mexico to the south, and the Atchafalaya basin to the north. When leaving the populated area around Morgan City going east or west, the next closest community was over 20 miles away. And, like Shangri-La, everyone was happy, because almost everyone was working and making money! And, lots of it!!
When I moved to Morgan City immediately after graduating from dental school, I was amazed to find that welders, pipefitters, and fabrication technicians made salaries that were 2 to 3 times my starting salary as an associate in a Morgan City dental practice.
Anyone who wanted a job could find one within 24 hours of arriving in Morgan City. It was not uncommon for me to arrive at my office and find between six and ten workers waiting for the physician’s office next to mine to open so they could receive medical clearance and go to work that same day.
During this period of the late 70s oil boom, time equaled money. Oil companies and oil field service providers were happy to pay extraordinary amounts of money to save time. In the oil boom of the late 70s time meant money, and time wasted meant money lost. The oil rigs operated 24 hours a day and everyday of the year. Vendors and suppliers were able to charge top dollar for their services and had staff on call 24 hours a day, 365 days a year. The Oil Field never slept!
In addition to a normal job or occupation, many people had a side business related to the oil industry. Many professionals were also owners in limited partnerships that provided offshore work boats, barges, supply vessels, and needed oilfield equipment.
I was encouraged to engage in several different types of limited partnerships and was informed that these limited partnerships were “cash cows” that provided instant cash flow, accelerated depreciation for business equipment and boats, and could be sold for a profit once the business equipment was fully depreciated.
Skilled and unskilled laborers, technicians, tradesmen, management, and professionals all made high salaries, and anyone job hunting could find a well-paying job. It was not uncommon for workers to receive extravagant annual bonuses.
Housing was at a premium, and many houses never reached the market, instead being sold in pre-market private agreements. When my wife and I arrived in Morgan City, there were five houses for sale within a 10-mile radius of Morgan City.
The oil field is a rough and dirty business, and Morgan City is not a beautiful town. No one had time to think about aesthetics when there was so much money to be made. No one really seemed to notice, as all of the dollar bills in front of everyone’s eyes seemed to cloud everyone’s vision.
It was not uncommon in my office for me to treat people of many different backgrounds, races, and nationalities over the course of a normal week. It was also not uncommon to carry on a conversation with someone who may have worked in Alaska the previous week and would be working off the coast of India, Africa, or South America the following week. Oilfield workers from Morgan City literally worked around the world.
It was a normal occurrence to see an engineer with a college degree, working side-by-side with someone who may not have finished high school. Both respected the knowledge of the other (didactic knowledge versus practical knowledge), and both realized that they needed each other to keep the black gold pumping out of the ground.
Oilfield men, in many cases, became their own caricatures, wearing expensive clothes, sporting ultra-expensive watches and jewelry, and driving luxury vehicles.
Extravagant gifts to business contacts and job foremen were not uncommon and were deemed to be a normal business expense of operating in the oil field. New shotguns and fishing rods, trips to expensive hunting camps, and cash payments were passed around like chips on a very expensive and high-stakes poker table.
It’s hard to adequately describe the frenetic pace of the oil field, and the amount of money that was flowing through our small community.
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Why is This Relevant?
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When living in a vacuum, with no true point of reference, it’s hard to understand that you are living in an unrealistic time. Living in a community where everyone makes money and money flows like the Mississippi River, a person may mistakenly assume that everyone lives in a place where everyone makes money and that the dollars will never stop flowing.
And the money did flow, until it didn’t!
The oilfield economy is boom or bust. There is no middle ground. During boom times it was like trying to drink from a fire hose, and in bust times it was like trying to find water in a desert. The first few months after I opened my private dental practice marked the peak of a long oil boom, and the beginning of a protracted oil bust. No one escaped the detrimental effects of an oil bust!
Almost every business in Morgan City was tied in some way to the oil field. Even professionals and non-oilfield businesses were not immune to the effects of a downturn in the oil economy. Many men and businesses that were making millions of dollars only a year or two prior now had very little or no income. With little or no offshore activity, there was no economic driver to stimulate the local economy. Many men went from being multimillionaires to paupers within the space of a few years.
My practice had only been in existence for about a year when the oil bust of the early 1980s began. I was to experience several more boom and bust cycles during the course of my practice career.
Because I had only recently graduated from dental school, I had no free cash to invest in oil field businesses when I started practicing in the late 70s. I felt as though I was missing out on a unique opportunity to make big money in the Oil Field In the early 1980s. I watched from the sidelines as the carnage in the oil field progressed, and as many of my professional friends lost most of their net worth as the oilfield businesses they were associated with lost money or went bankrupt. Many were burdened for many years after with debt from the failure of these sideline businesses. My practice suffered, just like every business in my community, but I was blessed in the fact that I wasn’t saddled with extra debt from the failure of oilfield investments. I had very little free cash, so the extra dollars that I earned were placed in retirement accounts or re-invested into my practice. When the oil economy went into a boom phase again, my practice was able to flourish because of the infrastructure and educational enhancements in my practice.
The oil industry, along with the millions of dollars provided to the local economy, receded and left misery and heartache in its path.
Over my 35-year practice career in Morgan City, I survived numerous boom and bust cycles in the oil field. Changes in drilling technology and the initiation of Deepwater drilling eventually signaled a decline in the fortunes of Morgan City. Bigger and heavier boats needed deeper draft ports that were closer to the Gulf of Mexico. Satellite technology, the internet, and cellular technology ushered in a new age of offshore asset management. Innovations in oilfield technology meant that Oil wells in the Gulf of Mexico could be monitored and managed from anywhere in the world, and Engineers and technology experts no longer needed to be located close to offshore ports which provided direct on-site access to drilling rigs.
Morgan City, even though it is no longer the linchpin for offshore activity, is still a great place to live and raise your family. It provides numerous opportunities to interact with several different natural ecosystems. Whether is resurfaces as an oilfield boom town remains to be seen, but technological and political changes weigh heavily on the future of Morgan City.
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Life Lessons
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Going through a prolonged oil field contraction early in my practice career taught me valuable life lessons. Being a first-hand witness to a massive contraction in the oil field without being severely affected gave me a unique perspective that I have carried through life.
What are some of the things that I learned from my early life during the crazy days of Morgan City?
- It’s never all good and it’s never all bad- like many others, I didn’t understand at an early age that every business goes through economic cycles of up and down periods. The amplitude of the oil field cycle was impressive and terrifying to watch, especially in light of the destruction wreaked on the economy of my small community.
- Never believe in unrealistic forecasts– I was told numerous times by numerous people that I needed to invest money in oilfield businesses. it was not my business acumen, but my lack of free cash that prevented me from making serious financial mistakes early in my working career. Don’t believe everything you see and hear! Much of the information you receive is incorrect!
- Save for a rainy day– not every person or business was crushed by the oil field boom and bust cycle. Smart business people made provisions for economic downturns and positioned their businesses to thrive when conditions improved.
- Big hat, no cattle– this term is used to describe people who promote themselves as being influential and wealthy, when in fact, they are neither. I realized early in my career that businesses that prospered through both boom and bust cycles were owned and managed by serious businessmen, who were neither loud nor flashy. Most of the wealthy residents in our small community were very humble and unassuming.
- Believe in yourself– early in my practice career and faced with a severe economic downturn, I had only my education, faith in God, and faith that my ability to treat people honestly and appropriately would pay dividends over time. Like many of the smart businessmen I observed, I remained conservative and invested time and money in improving my skill set, improving the educational level of my staff, and providing the best and highest level of skill and care.
- Diversify– in both life and stock investing, diversification reduces risk. Businesses in my community that were solely devoted to the oil field, suffered the greatest during economic downturns. When investing in the stock market, the greatest return can be expected from investing in fewer stocks. However, if these stocks underperform, then the losses are magnified.
- Invest regardless of economic conditions– the fact that I was able to invest in myself and my practice location when conditions were less than perfect paid huge dividends when the local economy began to thrive again. I recently read an article that stated over a 20-year period the difference between investing annually at the lowest point or the highest point in the stock market ultimately generates a terminal balance difference of no more than approximately 1.5%. Many investors spend countless unnecessary hours stressing about the best time to invest when ultimately the percentage difference in the terminal value is very small, and the practical difference is almost negligible.
- Carpe Diem– “Seize the day.” Live every day like it’s your last. Seeing the vast swings in the fortune of my hometown over the course of many years taught me that things never stay the same. Seizing opportunities as they are presented and not waiting for a different or better opportunity prevents losing that opportunity altogether due to uncontrollable circumstances.
- Follow your heart– after a long and successful career my practice was transferred to a younger practitioner and my wife and I moved to a different city to be closer to family, healthcare professionals, healthcare facilities, and cultural opportunities. We miss our friends in Morgan City and still visit often. But, we needed to follow our heart and move to a different city for different opportunities.
There are other life lessons too numerous to detail. The list above catalogs major life lessons learned and solidified during my time spent in Morgan City.
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Final Thoughts
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- I had the great fortune to live in Morgan City, Louisiana for the majority of my adult life. It is there that I learned many valuable life lessons.
- Sometimes it’s hard to see something in it’s entirety when you’re too close to it. When you move back and observe the same situation or problem from a distance, then resolution and understanding become easier.
- Over the course of my dental career in Morgan City, I probably developed three separate practices. With so many people stationed in Morgan City for a finite period of time, I was forced to constantly replenish my patient base with new patients. Changes in oil field technology meant that highly educated engineers and technicians no longer needed to be in Morgan City. Over my practice career, the demographics of my patient base changed dramatically.
- Living in Morgan City without being directly employed in the oil industry allowed me to experience the oil industry and its various boom and bust cycles. It was through these boom and bust cycles that I learned many valuable life lessons.
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