Global Supply Chains May Shift as New Energy Sources Are Discovered

The report, Energy and the New Global Industrial Landscape: A Tectonic Shift, is being released for the World Economic Forum 2013 Annual Meeting in Davos-Klosters, Switzerland where IHS is a strategic partner.
By Patrick Burnson, Executive Editor
January 21, 2013 - SCMR Editorial

The unconventional oil and gas revolution has dramatically changed the global energy landscape, and in its wake is altering the world’s competitive manufacturing and industrial panorama, according to a new report from IHS, a leading source of global information and analytics.

The report, Energy and the New Global Industrial Landscape: A Tectonic Shift, is being released for the World Economic Forum 2013 Annual Meeting in Davos-Klosters, Switzerland where IHS is a strategic partner. It looks at the impact of unconventional (shale gas and “tight oil”) energy on world energy markets, the automotive and chemical industries as well as on the United States where it is improving manufacturing competitiveness.

While unconventional energy has been “a big boost” for North America, IHS Chief Economist Nariman Behravesh, one of the report’s authors, said its impact will also eventually be seen more widely as other countries develop their shale gas and tight oil resources.

“Initially, this has been – and will continue to be – a big boost for North America,” Behravesh said. “However, other regions and countries with large shale gas and tight oil deposits can, with time, also participate in this energy revolution and industrial renaissance.”

A new study by IHS estimated that in the United States alone, the surge in unconventional oil and gas extraction has led to the creation of 1.7 million jobs and added $62 billion to federal and state coffers in 2012.

The big drop in energy prices has also led to a surge in investment in the United States, posing a risk for Europe and Asia which face migration of manufacturing to North America and the loss of competitiveness, said Behravesh.

The question of whether the unconventional oil and gas revolution will go global is increasingly being asked by companies and governments alike as major opportunities have been identified around the world, according to IHS Vice Chairman Daniel Yergin, also an author of the report.

“Major opportunities are being identified around the world,” said Yergin. “Our research indicates that the resource base in China may be larger than in the United States, and we note prospects elsewhere. However, circumstances that promoted this development in the United States differ in important aspects from other parts of the world. It is still very early days and we believe that it will take several years before significant amounts of unconventional oil and gas begin to appear in other regions.”

“There is one wild card, however, said Derik Andreoli, Ph.D.c., a senior analyst at Mercator International LLC and Logistics Management’s popular Oil & Fuel columnist: Iraqi production.

“After decades of underinvestment under Sadam Hussein, Iraqi production has been booming,” he said. “If Iraq continues this performance, surplus oil production capacity could increase, which will be advantageous from the perspective of price volatility.”



About the Author

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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).

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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

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