Energy sector’s supply chain faces new challenges

Still, some shippers will continue to be “negatively impacted” by a lengthy permitting process, said NAM
By Patrick Burnson, Executive Editor
October 17, 2010 - SCMR Editorial

Manufacturers and members of the nation’s supply chain community welcomed the news last week that the Department of Interior’s would be ending the offshore drilling moratorium in the Gulf Coast region.

“Manufacturers are encouraged by the Administration’s announcement that it has lifted the deepwater drilling moratorium,” said The National Association of Manufacturers (NAM) President John Engler. “However, the lengthy permitting process keeps rigs idle and essentially creates a de facto moratorium. Every day the rigs remain idle, thousands of jobs are at risk in the Gulf Coast and throughout the nation.”

According to Engler, manufacturers who make and supply equipment, services, engines, boats and materials such as steel and concrete will continue to be “negatively impacted” by this lengthy permitting process.

“This added bureaucracy and the confusing regulatory framework only increase costs and place more uncertainty on our already struggling economy—forcing our nation to rely even more on foreign producers, discouraging investment in new projects and stifling job creation,” he said.

Engler added that manufacturers will continue to work with the Administration and Congress to ensure there is clarity in the regulatory process and permits are issued in a timely manner.

Stephen Hester, vice president and chief procurement officer with Smith International, inc.— recently acquired by Schlumberger Limited—also voiced his approval for the resumption of drilling.

Speaking at the 2010 Supply Chain Council Executive Summit in Houston last week, he noted that demand for more oil will by driven by consumers in emerging nations.

“That means that we not only have to drill more frequently,” he said, “but even deeper than ever before.”

From a procurement perspective, he added, that will present new challenges.

“Since energy companies cannot control price, we have to focus on cost,” he said. “Meanwhile, we have to be tough with our suppliers and act decisively. All industries dependent upon energy are going to be kept very busy in the coming years.”



About the Author

image
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 .(JavaScript must be enabled to view this email address).

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!

Recent Entries

A recent report published by The Boston Consulting Group (BCG) and the Grocery Manufacturers Association makes clear the supply chain challenges consumer packaged goods (CPG) shippers are up against, with some of these challenges, specifically transportation-related ones, gaining traction in recent years.

Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk. Using the precise metrics captured in Armstrong’s most recent study, he'll demonstrate how shippers can measure ROI and plan for the future.

At $2.832 per gallon, the average price per gallon was down 1.1 cents, following drops of 1.6 and 1.1 cents the previous two weeks and a cumulative 8.2 cent cumulative drop over the last six weeks.

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 56.0 in June, which edged out May by 0.3 percent.

Regardless of the date or year, one thing is beyond consistent when it comes to key themes in freight transportation logistics: the state of United States highways and related transportation infrastructure is in an eternal state of chaos and disrepair.

Article Topics

News · Supply Chain · Procurement · EPA · Economy · Make · All topics

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.