Supply Chain and $200 Oil

Supply Chain and $200 Oil: "Supply Chain and $200 Oil. It hardly seems that long ago, but in 2005 I wrote a column called “Supply Chain and $100 Oil.” At the time, I believe oil prices had increased to more than $60 per barrel, Goldman Sachs analysts had just predicted we might see $100 per barrel oil soon.

Helge: When the price of oil is moving towards $200 per barrel. What does it mean?

Well that prediction turned out to be somewhat premature, but here we are. Those views were certainly more accurate than the predictions of many others who said in 2005 that oil would drop back to the $45 per barrel range. As oil went to $70 and then $80 per barrel in 2006 and 2007, many more said that wouldn’t last.

Gilmore Says: Think about that for a second. It’s possible we could get a doubling from today’s level of staggeringly high fuel costs. The impact to supply chain strategy would be substantial.
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This week, of course, the price is $107 per barrel or so. That’s up something like 65% from the start of 2007. It’s already causing havoc in our supply chains. Transportation costs are rising despite significant overcapacity in most truckload and less than truckload markets, as we’re stung by the fuel surcharges that have enabled the carriers to push all of the fuel risk on to shippers.

Helge: I'll comment this later. Why is the price of oil so high?