Title: The Railway Industry, The Oil Industry, and ExxonMobile (clip, A Book with Legs ep. 418) Show: A Book with Legs Podcast (Smead Capital Management) — Cole Smead is the HOST/interviewer here Guest: Graham D. Taylor — author/professor, "Imperial Standard: Imperial Oil, Exxon, and the Canadian Oil Industry from 1880" Date: 2025-08-05 URL: https://youtu.be/9JAKUu8RjZM (clip; full episode: https://youtu.be/NqKTo10x2sM) Length: 8:59 Note: Clip from Cole's own book podcast — the pundit content is COLE's frameworks posed as questions (the guest is a historian, not a stock picker). Garbles: "royal bed"=roadbed, "Barrack Gold"=Barrick Gold, "ProCanada"=Petro-Canada, "Nbridge"=Enbridge, "ESO"=Esso, "Prud Bay"=Prudhoe Bay.
00:02 I have two kind of bigger picture questions and these aren't necessarily in your book but I think you'd have a particular take on these. Um the paradigm I use for kind of giving a framework around the oil industry in the long run and you touched on this somewhat earlier. Um you you mentioned the you know the Canadian railways.
00:20 There's two Canadian railways that dominate the market up there. That is actually my framework and paradigm, my economic paradigm, if you will, for thinking about where we're going in the oil business. So, I tell people that I think there's going to be three Canadian oil companies that dominate the oil and gas business in say 15 or 20 years.
00:38 Okay? Just like we we're were uh watching Union Pacific possibly go after CSX in America right now, which would leave us with two major railways here in America. And so if I think that those paradigms, capital intensive industry has cyclicality, needs major investment, those kind of fall in line with the oil business.
00:56 So I think that's where we're going. Would you say that that the railroad business is a good model to think about because again you need rationality on pricing or is that a bad economic paradigm to frame the oil business with in Canada? Let's just say >> that's a good question. Uh, railways are, let's put it this way, railways have a uh an established role of transportation.
01:25 >> Mhm. >> You know, once you've got the royal bed in place and the rolling stock and all the rest, it just becomes a kind of well, who's going to be better and more efficient at running it? >> Sure. In the oil business, it's it's sort of uh well, it's kind of depends. It depends on how whether you're lucky enough to be at the right place at the right time and you know, be able to exploit opportunities and and this has been true in the oil business all along.
01:59 You will have uh you know uh entrepreneurs. I mean J. Paul Getty would be an example back in the 60s. >> Sure. >> That that would go out and you know this was in the time when the big refiners cartel the the seven sisters ran everything. >> Yeah. >> But he was able to come in and he you know broke into that uh that big he didn't actually break into the cartel.
02:25 He just defied them. >> And it's that kind of thing that you know serendipity if you will the the ability to take advantage of an opportunity. uh that I think makes it uh a much more potentially dynamic kind of situation. Railways uh you you know what they're going to do. You if they're better at the at at it than the other side or eventually or it makes more sense for them to you know to consolidate in order to cut costs.
02:55 Yeah, that makes sense. And in a way the big oil companies have tried to do that. That's why they formed the refiners cartel. Sure. Sure. >> I agree. >> There's always going to be somebody and in a company. Well, another example, mining is another one. You know, you have, you know, I I was actually looking at the gold industry.
03:18 Gold mining companies like Barrack Gold, for example, are huge. You know, they have exp they have uh you know, investments all over the world. Although sometimes they make a mistake like I think they had a big investment in some African country and they they just had a revolution and the new president just said I'm going to close down all the >> Yeah.
03:38 the mines >> all the gold mines that belong to foreigners. >> So uh but uh there's another one. It's just I think it's called New Gold or something like that. And these guys, I don't know, I they've got a very few uh minds spare compared to a company like Barrack or, you know, El Dorado or whatever, but their their stock has taken off because it's almost like going back to the good old days, the you know, the gold rush.
04:06 They're the guys who got there first, you know, and panned the gold. >> Sure. the the other the the other kind of bigger picture question I wanted to ask you was um and I'll give you my two cents on this and and I'll probably look more foolish than you will, but um can you ever see a point in the future where Imperial is not controlled or majority owned by Exxon Mobile? >> Well, what's your opinion? >> Well, so here's here's I'll give you my opinion.
04:39 I think I can see where it's not. And if I use your book as my key to understand how that could come to pass, it will only transpire through Canadian politics. That's it. That's the only way it happens. And I could see where a you know a very charismatic politician comes about and says you know in the scale business of oil like if we get down to fewer players like we will continually I think we'll do they will say why does it make sense to have an American business so ownorously controlling such a Canadian history and Canadian industry
05:15 and and uh you know I I could see that being but where it would come about is through the lobbying of a Canadian owner who says, "Hey, I might want to be the controlling shareholder there." >> I Well, I would say maybe. Uh I mean, in a sense, that's what Trudeau was trying to do in the 70s was uh create ProCanada as a company that would displace not just Imperial Oil, but all the big oil companies in Canada.
05:46 >> Sure. >> Um and I mean, well, look at Russia. There's an example for you. The uh you know, Putin comes along and and he rounds up all the all the oligarchs who took over the oil industry there and some of them get thrown in jail and some of them been sent into exile and now it all belongs to Putin. >> Yeah.
06:10 >> But uh >> by by the way, there's there's some oil executives that if it send off in exile, the companies would do a lot better to be honest. So may may there's some truth to that rumor. Um let's see. I I want to hit a couple topics that we didn't talk about, but I just got to throw out there as breadcrumbs for our listeners.
06:26 Um Graham, uh so we didn't we you know, we touched quickly at Prud Bay. Um other things we didn't talk about the Greater Canadian Oil Sands, which ends up becoming part of Suncor, Suncor being part of the old Sun Oil. We didn't talk about Interprovincial Pipeline, now what we know as Nbridge, um which was in your book.
06:45 Uh we also don't talk about ESO, which was a great You talked about the ESO brand coming across. You talked about a tiger in your tank, which I remember as a kid here in the United States of America. You talked about sponsoring hockey night in Canada. >> Oh, yes. >> I mean, there was just so many good pieces to this book.
07:00 So, I kind of want to open it up to you since we're late. Is just is there something in this history that you found so peculiar or fun that you you'd really want to share with our listeners or something that's outside the book that you never did talk about? Uh, well, I I don't I can't think of things right off the bat.
07:25 I I Jesus, I sound like that woman who ran for president last year. I can't think of a thing. >> Yeah. Well, because there's there's just so many good things. I mean, like when you're explaining hot hockey night in Canada, I just thought this is incredible that that the Imperial was the brand of hockey night and given growing up in the United States, I would never know that.
07:42 But the tiger in your tank, for example, like I remember as a kid, you would get they would give you uh to put around the opening of the gas can, you could put a tiger tail and cars would have tiger tails hanging out of their gas cap, >> right? Yeah. I I that was interesting because those were uh those were the American comp who's the standard people that invented the tiger of course didn't come to think of it >> they got it from some British company there was some British oil company >> that came up with the tiger but the tiger it was this is the thing that's
08:19 interesting I forgot which one it was it wasn't BP but it was one of them uh The tiger that they featured in their ads was a big scary tiger and it wasn't a big, you know, wasn't a big hit. >> Yeah. >> When it got to the US, they said, "Oh, we're going to make a friendly tiger." You know, he's a cartoon character.
08:42 And that was very successful. That was So, it all matters. It all depends on how you how you uh design your brand. My guess is as we're in the Trump era, people would much rather have a fierce, dangerous tiger than a >> tiger. Yep.