Logistics Management - June 2010

transportation best practices
Sharpening LTL Management:
As the economy recovers, shippers should expect fuel prices and
LTL rates to rise due to global oil market supply constriction.
Two experts take a closer look at where oil exports stand and how
shippers need to prepare for pricing instability.
By Derik Andreoli
By this time, most logistics and
supply chain professionals
have heard about “peak oil”
and have been warned that
oil production will certainly
peak in the future. Typically, oil supply
is evaluated using production data,
but production data alone paint only a
partial picture of the supply constraints
that contributed to the oil price spike in
the summer of 2008
While production certainly matters,
only a portion of the oil that is produced
worldwide is sold on the global
market. Hence, net oil exports—the
total amount of oil exported from surplus
producer countries—offer a far
more important measure of supply than
production data alone.
The problem, however, is that global
oil exports peaked in 2006; and despite a
tripling in the price of oil, global exports
were in fact lower in 2008 than they
were in 2004. But why did exports peak
while production continued to grow
Over the last four decades the structure
of the oil industry changed dramatically.
In 1970, investor-owned oil companies
(IOCs) like British Petroleum
and Exxon Mobil controlled 85 percent
Daniel Guidera
Global oil exports peaked in 2006, and despite a tripling in the price of oil, global exports were in fact lower
in 2008 than they were in 2004.
30 Logistics Management WWW.LOGISTICSMGMT.COM | June 2010