New energy resources must be explored says API

Analysts also agree that key to any economic rebound will be the price of fuel

By ·

The nation’s supply chain may be at risk if new sources of energy are not tapped in the near future, said the American Petroleum Institute (API).

According to API’s President and CEO Jack Gerard, the Obama Administration’s position of domestic offshore drilling is untenable and risky.

“This reversal on new lease sales off America’s coasts comes on top of a de facto moratorium, which has all but stopped new drilling in the Gulf of Mexico.”

Gerard also warned that the administration’s decision could result in the loss of American jobs, billions less in government revenues and an increasing dependence on foreign energy sources.

Analysts also agree that key to any economic rebound will be the price of fuel. Derik Andreoli, an energy analyst and doctoral candidate at the University of Washington, said there is deep uncertainty in how energy for power, heat, and mobility will be sourced, and how it will be paid for.

“The potential consequences of failing to plan for the unfolding energy paradigm could be catastrophic,” he said.

At the same time, said Andreoli, shippers must address energy-related risks to supply chains and the increasing vulnerability of just-in-time models reliant energy constantly available throughout the supply chain.

“On my radar, the hot topic at the current moment is China’s diesel shortage and how an increase in demand for diesel imports will impact prices through the rest of the year and into 2011,” he said. “It is unclear whether the diesel shortage will reverse in the spring.”

What we do know, said Andreoli, is that refined oil stocks of China’s two largest oil companies have fallen for eight consecutive months and diesel stocks fell by double digits in December alone.

Analysts also expect that the crude and diesel markets will remain volatile, because the recession and the temporary drop in the price of crude caused some investments to be put on hold.

“Crude production peaked in 2006, and net oil exports declined for a variety of reason between 2005 and 2009,” said Andreoli. At the same time, consumption is rising in China.”


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

China · Exports · Imports · Supply Chain · All Topics
Latest Whitepaper
Finding Agility in your Workforce: Are you prepared to meet the next market shift?
Logistics companies need every advantage available to them to be a vendor of choice and remain competitive
Download Today!
From the April 2017 Issue
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management market, and in marked contrast to 2016, paints a rosier outlook for career placement and advancement.
Is Your Tractor Trailer Yard a Black Hole?
Information Management: Wearables come in for a refit
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Maximize Your LTL Driver Adherence with Real-time Feedback
This webinar shows how companies are using real-time performance data to optimize the scheduling of their city fleets, as well as the routing of their standard, accelerated and time-critical shipments.
Register Today!
EDITORS' PICKS
2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...

ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...
2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...