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Are oil and gas prices making you green?

By Jeff Berman, Group News Editor
March 09, 2011

When I am asked what the big topic in the industries LM covers is these days, there is no surprise of late. It is a one word answer: fuel.

How could it really be anything else at this point? If you need more proof, look at the past two weeks of diesel price increases from the Energy Information Administration. They both check in around the 15-cent mark. Ouch.

While I am not a numbers guy, it is not hard to decipher that if these weekly increases remain on this current growth path, we are going to be staring at $4 gallons really soon. Double ouch. What’s more, fuel is up significantly—roughly 20 percent in the last two weeks alone.

Again, how can anything else truly be the story at this point? When it comes to things that disrupt logistics planning and supply chain management operations for anyone in this business, it is hard to forget that all supply chains are heavily oil and gas-dependent.

These price hikes are not mode-specific either. If you move freight, you focus on fuel, right? It does not matter how you move it, because it all runs on fuel.

This brings me to the topic of sustainability.

In 2008, when oil and gas prices made their torrid run to never-before-seen levels, all we could talk about was “how we need to change the way we run things,” modal shifts, and being “green.”

Well, now, here we are two and a half years later, and the new situation sure looks a lot like the old situation. Energy prices are up, and as a result this economic recovery we are in looks a whole lot more shaky.

And once again, being “green” is undoubtedly creeping into the supply chain lexicon. When I talk to shippers and carriers about their sustainability plans, it is clear they all care about it and all have plans they can point to and talk about at length.

But with carriers and shippers both making up for lost profits, I am wondering if being green has taken a back seat, when it comes to logistics planning and operations? It stands to reason that it has, and that is not a surprise.

But that does not make being green any less important either, right? In fact, I was told by a C-level executive at a global 3PL that every RFP his company receives has some sort of language about sustainability. So, I guess I just answered my own question.

In any event, there does not appear to be any tangible evidence that this run up in oil and gas prices is dying down soon. That said, I cannot help but wonder how much more we will hear about supply chain sustainability in the near future.

It is not a conversation that should be broken out just when prices are heading in the right direction. It is a conversation that should be happening all the while, in good times and bad.

I have no doubt it is happening. More than a few people have told me it is. But let’s hope that when we see future pain at the pump once this run has subsided, that we are not being caught by surprise by anything either.

What is your take on supply chain sustainability in light of current events? Newsroom Notes wants to know.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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