Business leaders despise few things more than uncertainty.
They seek to eliminate as much uncertainty as possible throughout every step of their operations.
The oil and natural gas industry has used technology over the past decade to significantly reduce risk. Three-dimensional seismic readings and directional drilling have all but eliminated the dry hole by allowing operators a much better view of what lies underground and far greater control of how the drill bit snakes to its target.
Out of more than 2,500 wells drilled in the state in 2011, only 92 were dry.
While the risk of dry holes has been greatly reduced, far more expensive modern drilling processes mean a well could produce a decent amount of oil and natural gas, but still not be profitable. Even there, companies are reducing risk by lowering costs and improving their understanding of the rocks.
The oil and natural gas industry has made significant steps in eliminating risk throughout the processes, but despite their best efforts, they still have no control on one of the most significant variables to their profitability: the weather.
Hot summers lead to a surge in demand for fuel as millions of American homes and businesses crank up their air conditioning.
Cold winters have an even greater effect by driving up demand for both electricity and heating fuels such as natural gas, propane and fuel oil.
Difficult winters also can affect supplies by slowing oil and gas operations.
Most mid-size and large oil and natural gas companies either have meteorologists on staff or on contract to help them predict how weather patterns will affect commodity prices.
Despite the efforts, few saw this winter coming.
In the fall, there were various projections that winter could be colder and wetter than normal. But none called for a polar vortex and wave after wave of frigid weather to stretch throughout the Midwestern and Eastern population centers and as far south as Atlanta.
Just three months ago, natural gas futures contracts remained between $3 and $3.50 per thousand cubic feet for more than a year out. This week, the futures price for March delivery jumped as high as $6.15.
The unusually warm winter last year had the opposite effect, causing natural gas prices to fall. But while few expected such weather this year, none should be surprised at the effect weather can have on the industry.
Risk reduction is essential to any business, but in the oil and gas industry, one of the biggest factors remains beyond control.