CSCMP's Supply Chain Quarterly
October 22, 2018

Dealing with our oil addiction

Will the Deepwater Horizon disaster spur us to develop new sources of energy?

Let's face it. We are addicted to oil. And by we, I mean the entire developed and developing world. Energy is at the core of economics. You cannot mine, make, move, or grow anything without it.

And what we demand most of all is oil. As we all know too well, the acquisition and use of oil is at the heart of a host of problems: global warming, pollution, political risk, and instability among some of the major producers, to name a few.

We've been aware of this for a long time. The first Earth Day came about partly in response to the blowout of an oil platform off the coast of Santa Barbara, California. In 1973, the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers in the Middle East showed how quickly they could derail international economies by withholding supplies. The Exxon Valdez oil spill in 1989 demonstrated the damage crude oil can do to the environment. And now we have the Deepwater Horizon disaster in the Gulf of Mexico, spilling thousands of barrels of oil into the sea each day.

Will this latest disaster spur further efforts to wean the world off petroleum and toward the development of new sources of energy? History suggests not.

Early on, we heard calls for at least a moratorium on drilling for oil in the Gulf of Mexico. But as Lisa Margonelli, the director of the New America Foundation's energy initiative and the author of Oil on the Brain: Petroleum's Long, Strange Trip to Your Tank, wrote in a fine opinion piece in The New York Times, that would not address the core issue. "All oil comes from someone's backyard, and when we don't reduce the amount of oil we consume, and refuse to drill at home, we end up getting people to drill for us in Kazakhstan, Angola, Nigeria—places without America's strong environmental safeguards or the resources to enforce them," she wrote.

The issue is far bigger than supply chain managers can address, but assuredly, those involved in moving goods as shippers or carriers must be part of the solution. Efforts like the U.S. Environmental Protection Agency's SmartWay program (which encourages companies to reduce the environmental impact of their transportation operations), the increasing attention to energy consumption in distribution network and facility design, and the strong prospects for rail intermodal linehauls all indicate that growing numbers of supply chain professionals are on board. We are a long way from curing this addiction, but we have taken the first step of admitting that we are addicted, and that we can and should do something about it.

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