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Much ado about oil

By Jeff Berman, Group News Editor
March 30, 2011

While looking at mainstream media news sites today, an item in The New York Times caught quickly caught my attention.

Maybe it caught your attention, too. Here is the headline:
“Obama to Set Goal of One-Third Cut in Oil Imports.”

Given the current situation, with oil barrel prices hovering around $100 and diesel approaching $4 per gallon, that headline, again, is really an attention-grabber as far as I can tell.

In short, the article explains how in a speech Obama will be giving at Georgetown University, he will discuss how the “United States needs, for geopolitical and economic reasons, to reduce its reliance on imported oil,” with more than half of the oil burned in the country today coming from overseas and Mexico and Canada.

It also notes, as Newsroom Notes has also pointed out, that when prices go up, we all panic, and when they go down, we resume our previous habits.

Of course, there is more to it than that. This current run up in prices, coupled with carriers focused on yield improvement i.e higher rates, does not help shippers run cost-efficient supply chains. But those are the cards currently being dealt at the table.

And as LM has reported in its coverage of weekly diesel prices, shippers are clearly concerned about the pace of these increases, as they are largely on the hook for them, financially-speaking, with fuel surcharges passed along to them by carriers on top of freight rates. Should prices continue to head north, it could likely limit future growth as well increase the cost of doing business, as it likely it already.

OK-that is a “been there, done that” thing, but it does not make things any easier for anyone either.

In recent weeks, there has been talk of the White House opening up the country’s Strategic Petroleum Reserve to alleviate pain at the pump for shippers, carriers, and consumers alike. And there has been a buzz of late about natural gas and how that could off-set our expenses and reliance on fossil fuels. There also are many companies making tremendous progress on alternative fuel vehicles for freight operations, too.

These things are very promising and could make a legitimate difference down the road. But with no defined deadline in site for when they could be fully applicable and depended on, it is the same old story for now—a story that is getting tired and repetitive.

Oh, yeah, there is also that little issue of zero meaningful forward progress on energy legislation in our country. Given the divided political party lines that are the new normal in the U.S., that is hardly surprising.

It seems like Obama’s speech will bring to light the things that need and should be done for the most part. The hard part is actually getting there.

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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