Money is like a sixth sense,” Somerset Maugham once said. “You can’t make use of the other five without it.”
This is certainly true in managing budgets during a recession.
Six months into fiscal year 2008-09, AAPG’s financial health continues to be sound. However, with the current economic recession, the question is, “How will AAPG fare financially the next couple of years?”
At AAPG we use several key economic indicators to monitor association health. The first four indicators are:
Most advertising revenue comes from the EXPLORER. During 2007 and 2008 the EXPLORER experienced extremely good advertising revenue. Advertising for the EXPLORER set records during the last six months of 2008; however, starting in 2009 advertising has slowed.
Nevertheless, the current rate is still good compared to historical rates.
Industry sponsorship for most AAPG programs is still strong – especially for the annual meeting in Denver and large conferences such as AAPG’s 3P Arctic – The Polar Petroleum Potential Conference and Exhibition in Moscow later this year. Monies are more difficult to obtain for smaller specialized conferences and programs.
For example, AAPG’s Imperial Barrel Award is experiencing incredible success with over 80 universities competing this year. Currently the committee has received over $52,000 in income but needs another $100,000 to reach budget.
Exhibitor registrations are good for the AAPG Annual Convention and Exhibition in Denver, and with an excellent technical program we are expecting robust preliminary registrations for the meeting. You can get more information about the program and registration in the Denver announcement that accompanied this EXPLORER.
Although a few companies are cutting back in booth size we are still meeting budget in exhibition sales and continue to add to the exhibition floor.
We are experiencing weaker markets for AAPG’s education program in 2009 as companies reevaluate budgets. For example, AAPG’s Winter Education Conference in Houston had 160 attendees last year compared to 120 attendees this year. This is still a higher registration rate than those of years previous to 2008.
Other economic indicators remain strong, including revenue from member dues payments. Total membership is a late economic indicator as it usually lags a year or more behind any major drop in the price of oil.
So generally, AAPG is healthy financially. Although we see some areas of weakening revenue in 2009, we are still above the income levels we experienced in 2006 and 2007. As a result, we expect to meet budget with a great annual meeting in Denver to close out AAPG’s fiscal year.
Since 1945 the United States has recorded more than 11 recessions. Each recession was essentially two to three years in duration no matter how the government tried to stimulate the economy.
The good news is that each recession was typically followed by six to 10 years of growth.
Although it is difficult to predict the demand and price of oil and gas, we do know that the global dynamics are significantly different from the oil boom and bust of the late 1970s. The economies of China and India will heat up again and the demand for natural gas from resource plays will play an important part in our energy future.
Richard D. "Rick" Fritz, an AAPG member since 1984 and a member of the Division of Environmental Geosciences and the Division of Professional Affairs, has been AAPG Executive Director since 1999.