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Oil plays an essential role in almost everything that touches our everyday lives. From the food we eat to the means by which we transport ourselves, our goods, and our services, to what we grow, build, have, own, need, and do, oil is almost always an important element. But the painful truth now and soon is that the ready supply of oil and gas that we almost always take for granted is on its way to becoming not-so-ready—recent production increases notwithstanding.

What happens when there’s not enough to meet all of our demands, to say nothing of those of every other nation—including the many countries seeking more growth and prosperity? What sacrifices will we be called upon to make? Which products will no longer be as readily available? Which services? Who decides? What will be decided? Who delivers that message to the designers and producers and shippers and end users? What’s their Plan B? And how will we respond when decisions are taken out of our hands? Where exactly will the dominoes tumble?

There is nothing on the horizon that will work as an adequate substitute for the efficiencies and low cost and ease of accessibility that oil has provided us. We simply do not have the means to make that happen—not the technological capabilities, not the personnel, not the industries, not the leadership … yet. Clearly, we do not have enough time to do it all with effortless ease and minimal disruptions.

Piecemeal approaches that address some small aspect of need for some short period of time in some limited geographical area for just a few consumers is in the end a monumental waste of limited resources, time, and effort. We can’t wait until we’re up to our eyeballs in Peak Oil’s impact to start figuring out what to do. We’re too close as it is. We’re going to have to be much better, much wiser, and much more focused. **

Here’s the latest contribution to my Peak Oil’s Impact series—observations and commentary on how Peak Oil’s influence will be felt in little, never-give-it-thought, day-to-day aspects of the conventional crude oil-based Life As We’ve Known It. Changes in all that we do, use, own, make, transport, etc., etc., are inevitable. A little food for thought….

I came across an interesting article I had saved from late 2011, discussing business strategies worth considering. The title alone: “Safeguarding Your Supply Chain Against Rising Oil Prices” suggests it would be worthwhile for corporate executives whose businesses require juggling inventory and labor costs along with issues surrounding one or more distribution center locations in their supply and distribution chain.

In an era of rising (or fluctuating) oil prices, business leaders would be wise to consider author Lorcan Sheehan’s advice:

The challenges that ensue can negatively impact your supply chain if your infrastructure is not equipped to handle quick adaptations. However, by planning ahead and reevaluating where your supply chain activities are performed, as well as your current processes, you can face these challenges head-on and lessen the impact on your operations and your bottom line.

I don’t even pretend to be an expert on business practices, but this brief read contains a range of solid advice about the need for planning in advance of escalating prices. Basic supply and demand tells us that as the demand for fossil fuels continues to grow, and the supply and/or energy efficiency of what is being supplied decreases, prices will rise. The dominoes for any one or all businesses of any size dependent at least in part on fossil fuels will then tumble quickly.

As I urge repeatedly, planning across the board is among our highest priorities, and well in advance of the more obvious and inevitable impacts Peak Oil will impose on all of us.

The scope of considerations Mr. Sheehan offers suggests that the planning and risk mitigation efforts are not something business executives can slap together in a half-day conference. Product needs; labor costs; taxes; environmental considerations; utilizing multiple routes to market; the possibility or or need to move supply chain activities; inventory maintenance; assembly locations; shipping, along with product packaging and redesign issues are all discussed in this article.

Similar considerations on both smaller and larger scales must be planned for by every business entity and government agency. Last-minute is not a strategy anyone should rely upon. Worth postponing?

~ My Photo: Good Harbor Beach, MA – 09.05.05

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** Opening paragraphs adapted from prior posts:

http://peakoilmatters.com/2010/02/15/looking-ahead-to-peak-oil-transition-part-iv/
http://peakoilmatters.com/2010/02/07/looking-ahead-to-peak-oil-transition-part-i/
http://peakoilmatters.com/2010/12/13/thoughts-on-peak-oil-planning/
http://peakoilmatters.com/2011/02/14/peak-oil-a-new-direction-pt-5/
http://peakoilmatters.com/2010/02/25/peak-oil-infrastructure-more-to-discuss-part-ii/

 

 

 

 

Oil plays an essential role in almost everything that touches our everyday lives. From the food we eat to the means by which we transport ourselves, our goods, and our services, to what we grow, build, have, own, need, and do, oil is almost always an important element. But the painful truth now and soon is that the ready supply of oil and gas that we almost always take for granted is on its way to becoming not-so-ready—recent production increases notwithstanding.

What happens when there’s not enough to meet all of our demands, to say nothing of those of every other nation—including the many countries seeking more growth and prosperity? What sacrifices will we be called upon to make? Which products will no longer be as readily available? Which services? Who decides? What will be decided? Who delivers that message to the designers and producers and shippers and end users? What’s their Plan B? And how will we respond when decisions are taken out of our hands? Where exactly will the dominoes tumble?

There is nothing on the horizon that will work as an adequate substitute for the efficiencies and low cost and ease of accessibility that oil has provided us. We simply do not have the means to make that happen—not the technological capabilities, not the personnel, not the industries, not the leadership … yet. Clearly, we do not have enough time to do it all with effortless ease and minimal disruptions.

Piecemeal approaches that address some small aspect of need for some short period of time in some limited geographical area for just a few consumers is in the end a monumental waste of limited resources, time, and effort. We can’t wait until we’re up to our eyeballs in Peak Oil’s impact to start figuring out what to do. We’re too close as it is. We’re going to have to be much better, much wiser, and much more focused. **

Here’s the latest contribution to my Peak Oil’s Impact series—observations and commentary on how Peak Oil’s influence will be felt in little, never-give-it-thought, day-to-day aspects of the conventional crude oil-based Life As We’ve Known It. Changes in all that we do, use, own, make, transport, etc., etc., are inevitable. A little food for thought….

My wife is in sales … the real estate/financial services industry, and she’s quite good. Quite successful, too. Top ten nationally, as a matter of fact, for a company whose name is instantly recognizable to anyone who’s ever done any banking or purchased real estate.

One of her holiday-season rituals, when her daily responsibilities decrease ever so slightly as the holidays near and thus allow her more time outside the office than is usual, is to become Santa’s cookie elf. Dozens upon dozens of favorite treats from a friend’s bakery—unfailingly a hit in every office she visits—are her calling card as she makes the rounds to the real estate and law professionals in the area with whom she does business. The contact with peers she much-too-infrequently meets with in person is a welcome assignment.

Re-establishing the personal friendships is the biggest bonus for professionals like these whose normal working hours afford them almost no time to nurture those important relationships. So too do the relaxed, friendly gatherings afford them all the opportunity to solidify their business relationships. The benefits are reaped every time a referral call is made over the course of the next twelve months.

The cookies my wife purchases are always an important door-opener, and they always work. They are far from her only marketing effort of course, but the personal touch and thoughtfulness go a very long way in having made her one of her company’s leading professionals for more than a decade.

The owner of the bakery likewise appreciates the large sum of money my wife spends out of her own pocket each year. Although the holiday season is the time when my wife makes her largest purchases there, she also makes use of those treats on other occasions during the year.

Customers like my wife are invaluable assets for the owner. The staff she maintains are no less dependent on that business. Her suppliers, the drivers who make deliveries to her store, the various service technicians who keep her kitchen equipment functioning or replaced as need be likewise draw indirect benefits from the bakery store clientele.

The ovens, miscellaneous kitchen supplies, paper goods, wrapping, cookie containers, and all the other items on what is no doubt a long list of supplies do not magically appear inside the bakery. Companies hire suppliers to build/manufacture/maintain/replace the items on that list, and they too depend on transportation up and down their own supply chains. Every employee up and down that line is also a beneficiary of the bakery owner’s success, as are the countless other small and large businesses in that industry who supply us all with treats as well as nutritional necessities.

As evidenced by the good will my wife maintains with her fellow professionals, there are vital intangible benefits to the process as well. Having an SUV makes it much easier for my wife to cart around her deliveries. That isn’t powered or maintained on good will, needless to say.

And so I’ll ask the very same question I’ve asked before: When the supply of depleting conventional crude oil continues to decline, and reliance turns to the inadequate supply of inferior quality, more expensive, harder to come by unconventional sources such as the tight oil formations in the U.S. and the Canadian tar sands cheered on by certain factions of the energy and media industries, what gets prioritized in such a way that every cog of these multiple supply chains are still supplied at current levels and relative costs?

If that does happen, what gets sacrificed as a result?

How much more difficult is it going to be in the years to come to sort all of this out and develop alternative means of providing these goods and services if we’re not having the conversations now with real-life facts to guide us—before we’re having serious problems? Waiting is a strategy, but it’s usually not a very good one.

~ My Photo: A quarry at Halibut Point, on the MA north shore – 09.10.05

** Opening paragraphs adapted from prior posts:

http://peakoilmatters.com/2010/02/15/looking-ahead-to-peak-oil-transition-part-iv/
http://peakoilmatters.com/2010/02/07/looking-ahead-to-peak-oil-transition-part-i/
http://peakoilmatters.com/2010/12/13/thoughts-on-peak-oil-planning/
http://peakoilmatters.com/2011/02/14/peak-oil-a-new-direction-pt-5/
http://peakoilmatters.com/2010/02/25/peak-oil-infrastructure-more-to-discuss-part-ii/

 

 

 

 

 

 

Oil plays an essential role in almost everything that touches our everyday lives. From the food we eat to the means by which we transport ourselves, our goods, and our services, to what we grow, build, have, own, need, and do, oil is almost always an important element. But the painful truth now and soon is that the ready supply of oil and gas that we almost always take for granted is on its way to becoming not-so-ready—recent production increases notwithstanding.

What happens when there’s not enough to meet all of our demands, to say nothing of those of every other nation—including the many countries seeking more growth and prosperity? What sacrifices will we be called upon to make? Which products will no longer be as readily available? Which services? Who decides? What will be decided? Who delivers that message to the designers and producers and shippers and end users? What’s their Plan B? And how will we respond when decisions are taken out of our hands? Where exactly will the dominoes tumble?

There is nothing on the horizon that will work as an adequate substitute for the efficiencies and low cost and ease of accessibility that oil has provided us. We simply do not have the means to make that happen—not the technological capabilities, not the personnel, not the industries, not the leadership … yet. Clearly, we do not have enough time to do it all with effortless ease and minimal disruptions.

Piecemeal approaches that address some small aspect of need for some short period of time in some limited geographical area for just a few consumers is in the end a monumental waste of limited resources, time, and effort. We can’t wait until we’re up to our eyeballs in Peak Oil’s impact to start figuring out what to do. We’re too close as it is. We’re going to have to be much better, much wiser, and much more focused. **

Here’s the latest contribution to my Peak Oil’s Impact series—observations and commentary on how Peak Oil’s influence will be felt in little, never-give-it-thought, day-to-day aspects of the conventional crude oil-based Life As We’ve Known It. Changes in all that we do, use, own, make, transport, etc., etc., are inevitable. A little food for thought….

Most companies large and small, I imagine, indulge in the long-standing tradition of the holiday party. A pleasant meal at a local restaurant, perhaps some awards or recognitions for various achievements over the past year, and general good will—and fun—are the primary motivations for events like these. My wife and I attended one for her company [local branches] and one for the office of the mutual friend responsible for introducing us to each other. My wife has also attended several other similar events on her own. I assume many of you attended similar functions.

Nearly two years ago, I wrote a post about the national sales conference. While the scale of most of these local gatherings is much smaller than the conferences which I discussed then, many of the issues and considerations are the same. While these holiday gatherings are typically much more of a social event that a combination of business and pleasure as they tend to be at the national level, there are professional benefits nonetheless.

The atmosphere affords employees at all levels to mingle with peers and management from other local offices in relaxed, congenial settings. Opportunities to address concerns either set aside or never voiced during the normal day to day bustle (for any number of reasons) frequently find a healthy forum at these events. Solidifying personal relationships no doubt make the more typical business interactions more fruitful.

So too do the upper level professionals derive benefits from meeting their local peers and exchanging ideas and information, strategies, marketing techniques, and a host of other brain-picking opportunities they rarely get a chance to experience. As is true of conferences on a grander scale, the free exchange of information plays a vital role in the successes these individuals enjoy.

Their successes provide boosts to management, staff, and the companies themselves. Better service ideas for customers exchanged at gatherings like these directly benefit their clientele. Those benefits cannot be readily quantified, but there’s little doubt that the social perks from these events are matched by the professional advantages gained by the exchange of ideas.

Will they manage to carry on without holiday gatherings? Of course! But when inevitable fossil fuel availability is more tangibly on the decline, how much longer will functions like these be budgeted for? The costs for hosting these events, along with the food, beverages and whatever entertainment might be featured will all rise as the cost and availability of supplies increase. Hard to imagine that ancillary events like holiday parties will maintain any sort of priority.

As I noted in that earlier post:

When industry after industry must deal with the elimination of these and similar business gatherings and the personal exchanges of information, a diminution of quality will creep onto the landscape. To the outsider, few tears will be shed, but when quality in all its manifestations declines, the effects are not restricted to only the industry or company in question.

The establishments hosting these functions will suffer business losses as well. The employees and suppliers will likewise be affected, as will the suppliers to the suppliers, and on and on the dominoes tumble.

As with most of the topics in this Impact series, these are not earth-shaking changes. But they will be part of the fabric of everyday lives adversely affected when the energy sources we’ve used and relied upon for decades are no longer as affordable and available. And as with every other feature of modern life dependent in some manner on the availability of affordable, quality fossil fuels, changes will either be settled upon in advance or forced upon us.

Planning ahead will help.

~ My Photo: winter day at Good Harbor Beach, MA – 01.14.11

** Opening paragraphs adapted from prior posts:

http://peakoilmatters.com/2010/02/15/looking-ahead-to-peak-oil-transition-part-iv/
http://peakoilmatters.com/2010/02/07/looking-ahead-to-peak-oil-transition-part-i/
http://peakoilmatters.com/2010/12/13/thoughts-on-peak-oil-planning/
http://peakoilmatters.com/2011/02/14/peak-oil-a-new-direction-pt-5/
http://peakoilmatters.com/2010/02/25/peak-oil-infrastructure-more-to-discuss-part-ii/

 

[NOTE: This post is part of an ongoing series (which started here) through the next few months whose purpose is to provide tangible examples of what our future might be like in a world where we will no longer have available to us the quality and quantity of fossil fuel energy sources as we have long been accustomed to possessing and using. Some examples will describe significant impacts beyond the most obvious one: less but more expensive gas to power our vehicles.
Other posts will describe routine aspects of daily living that will likely change when producers of goods and services no longer have inexpensive and adequate supplies of the fossil fuel resources they need. I’m certain that the questions I raise will in turn raise other concerns as well. It is only by acknowledging the consequences affecting each of us that we can begin an intelligent national process of planning and implementing new methods of providing the goods and services we’ll need or desire.]

~~~

A few weeks ago, I came across an article about several California small businesses which were being adversely affected by rising gasoline prices. As the story noted, small businesses are responsible for creating more than two-thirds of all jobs in this country. Any price hikes in gasoline are sure to affect almost all of them in one way or another … and that’s probably not a good thing.

One business featured in the story was a San Francisco-area carpet cleaning service. One of the owners expressed her growing concerns about the steady increase in those prices, since the significant added expenses were interfering with expansion plans she’d been hoping to implement this spring in light of a slight surge in demand for her services.

Businesses will suffer from increased costs for transportation as do individuals and families. When any of those consumers see price spikes in what they view as “necessities” (and are presumably not operating with an unlimited budget), some other piece of their budgetary pie is going to be sacrificed as a result. For you and me, a full tank of gas this week which winds up costing an extra couple of dollars over last week’s total may not seem like such a big deal over the course of a year … some weeks the prices will be higher, other weeks perhaps not. (In all likelihood, we’re past the point where we ought to be expecting substantial and/or regular decreases in pricing, unless of course we’re all fortunate enough to fall into another recession….)

So let’s say that after twelve months of semi-regular price increases, maybe we’re now spending $200 more than we did last year for the same amount of fuel for our vehicle. (The U.S. Department of Energy, however, is now estimating that these recent price hikes will cost the average family $700.00 per year. Not an insubstantial amount for those living paycheck to paycheck—if that.) More than one vehicle in the household, and the ding to your wallet is a bit more pronounced. If that were the extent of the impact, then on balance it might be manageable—but that’s an optimistic stretch. Of course, it doesn’t end there.

If our transportation costs are increasing, so too are the transportation costs of most other businesses and service providers. Few will absorb all those increases on their own out of the goodness of their hearts, and so that means prices across the board are inching up, too. (One obvious example important to everyone is the price of groceries. Most foods and beverages are shipped, and that means a lot of companies handling the deliveries are seeing their expenses increase. It doesn’t end there, either. The dominoes tumble quickly up and down the supply chain.)

But for a business like that carpet-cleaning service with its eight trucks and equipment which are all powered by fossil fuels, it’s not just a few extra dollars each week. The owner indicated that her gas expenses had increased a not-at-all insignificant 32% in January of 2011 over her costs a year earlier. With even higher prices in February, that math was not likely going to make her feel any better when it came time to looking over the monthly budget for her business. None of her options were encouraging: don’t hire new employees, pass on the costs to her customers, or refrain from purchasing new replacement vehicles.

Those choices have consequences. If she doesn’t hire new workers (and let’s not even consider the negatives to those who may have been counting on employment there), expanding her business will be more challenging. If she doesn’t expand her business and thus attract more revenue, and fixed expenses are increasing, the bad math results are easy to compute. At some point, the ongoing prices increases will force her to make other painful decisions. If prices level off, she can be sure that in the not-too-distant future, the availability of gas sourced from a steadily-declining supply base will have the same effect. Perhaps she doesn’t reach that point for a year or two or five, but the interim period will not be pleasant.

If she passes on the costs to her customers, there will come a time when at least some of them will have to decline her services, because they and their businesses or employers will be dealing with the same set of problems, and soon enough they’ll be making some sacrifices as well. And if her customer base shrinks, it’s not rocket science to see how that affects her, her family, and what she is able to spend her business revenue and net income on. Guess what happens to those businesses she frequents either for supplies to maintain her own company, or those establishments she relies on for personal reasons (clothing stores, hairdressers, etc., etc.)?

Of course, this series of cascading problems is not unique to an economy in the throes of gas price increases. It’s what happens in any recession, and it’s also what happens when a particular industry or two suffers shortages or price hikes for one reason or another. Most of the time, however, some semblance of fiscal equilibrium is reached in due course, and “business as usual” is once again the norm.

But with Peak Oil, the return to business as usual should not be counted on. At some point, price increases because of declining supply and ever-increasing demand (let’s keep in mind that there are a few billion people on this planet quite eager to experience their own version of prosperity just like all of us “wealthy” Americans have been enjoying for several decades) are going to hit a wall, or ceiling, or both. Most of us are simply not going to be able to afford ever-increasing prices, and it’s difficult to wrap one’s mind around all the changes and consequences which that eventuality is going to lead us to. (Plans, anyone?)

It’s just as realistic to expect that at some point, regardless of then-current prices, we may all be dealing with restrictions on availability of one kind or another, so affordability may prove irrelevant. You may be able to afford the $7.69 per gallon price that your sister or neighbor or son cannot, but if your city’s gas stations have reduced their supplies by X percent, what you can or will agree to pay won’t matter as much.

The third option our carpet-cleaning business owner may be contemplating as her fuel expenses eat up more of her budget is to simply not replace her equipment and/or the vehicles she relies on to travel to her customers. They won’t be bringing their hardwood floors or wall-to-walls to her office, so what happens when more and more repairs to her vehicles are needed? Safe to assume that those vehicles and machines are not equipped with protective bubbles which prevent wear and tear over time, so at what point do those types of repair expenditures become prohibitively expensive? What then? No good options, it would seem. Plans?

Do you see any significant differences in the types of problems your own home or business delivery service company might find itself dealing with now or soon enough? If you don’t own such a business, what about the home services you rely on? Appliance repair? Landscapers? Your own carpet-/floor-cleaning needs?

What are you going to cut back on when those providers are passing along their higher fuel prices on to you? Are you okay with those changes? Inclined to start mowing your own acre-plus yard because the landscaper will be charging 2 or 3 times what they did a couple of years back? Easy enough to take your malfunctioning refrigerator to your local or perhaps-no-longer local repairman? The list is limited only by one’s imagination.

We’re all guilty of taking a great many things for granted in our daily living. Talking about a carpet-cleaning service is one of only scores of similar services we don’t give much thought to in utilizing their services regularly. Peak Oil is going to change that.

Plans, anyone?