Transportation news: CSCMP speaker hones in on future oil and gas trends

Speaking at the Council of Supply Chain Management Professionals Annual Conference in San Diego last week, Chuck Taylor said that for the first time in its history the United States will be forced to increase economic growth while decreasing oil consumption, which, he said, is something that has never happened before.

By ·

Even though oil and prices are still relatively in check despite recent increases, the fact remains that the current rate of diesel consumption is not foreseeable in the future, according to Chuck Taylor, founder and principal of Awake! Consulting, an organization that encourages supply chain professionals to play active roles in shaping national energy policy.

Speaking at the Council of Supply Chain Management Professionals Annual Conference in San Diego last week, Taylor said that for the first time in its history the United States will be forced to increase economic growth while decreasing oil consumption, which, he said, is something that has never happened before.

“This is something that has serious implications for the prosperity of global supply chains,” said Taylor. “There are many who say that cannot be done…and that we are in for a permanent decline, but I don’t agree with that.”

And those who study and keep a close eye on supply chain management know there are viable opportunities for reducing fossil fuel usage and focusing on conservation, said Taylor.

In 2006 when the price of a barrel of oil was around $40, Taylor explained to CSCMP attendees that he was “early in his preaching” about how supply chain stakeholders approached energy prices.

“Cheap oil is what runs global supply chains and keep things moving,” said Taylor. “What we are in for in the future is not complicated. There are no alternatives to fossil fuel in the immediate future; 95 percent of the world’s transportation moves on oil.”

What’s more, with the world currently using 86 million barrels of oil per day, Taylor said that future production is not likely to keep up with demand. To back this up, he explained that the U.S. Department of Energy predicted in 2007 that by the year 2030 the world will be producing 118 million barrels of oil per day.

But since then that estimate has been dropped to 104 million barrels per day. And the current 86 million tally is expected to increase to 92 million barrels by 2020, which is less than 1 percent growth per year, which Taylor said will not keep up with demand.

And while diesel and oil prices are not near the record highs seen in 2008, Taylor said it is clear that cheap gasoline will not last, especially with few alternatives at the present time.

“It appears at times that people think we are entitled to cheap gasoline, but that is not the case,” said Taylor.

Just In Time supply chains, which are dependent on global transportation are likely to be impacted first when production lags demand, according to Taylor. This rings true, considering that 50 percent of total supply chain costs go towards transportation, he said.


About the Author

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. Contact Jeff Berman

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

· CSCMP · All Topics
Latest Whitepaper
Running Your Supply Chain with Greater Efficiency
Is your company’s supply chain piled high with more products, suppliers, and trading partners than you can keep track of efficiently?
Download Today!
From the January 2017 Issue
Following LM tradition, we start off the New Year with our annual “Rate Outlook” cover story and subsequent Webcast
Moore on Pricing: The other TMS functional options
2017 Rate Outlook: Where are freight transportation rates headed?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2017 Rate Outlook: Where are freight transportation rates headed?
Join our panel of top oil and transportation analysts for an exclusive look at where rates are headed and the issues driving those rate increases over the coming year.
Register Today!
EDITORS' PICKS
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...
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...

Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...
Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....