Squeezing Every Cent from a Barrel of Oil

Squeezing Every Cent from a Barrel of Oil

July 13, 2021

A barrel of oil is no longer a leaky cask. Rather, it is an economic concept.

As a result, creating value along the supply chain has evolved from streamlining operations to exploiting operational and commercial synergies. The emphasis has shifted from vertical integration and expertise in specialized energy sectors to a tightly coordinated system in which every opportunity to increase profit margins is pursued. The agile system has the potential to quickly address supply-and-demand imbalances through access to energy storage and a focus on spot sales rather than long-term contracts. A certain quantity of oil can only be produced once, but it can be traded multiple times to maximize profit throughout the supply chain.

 


Video Spotlight: Difficult Cooperation in the Oil Industry


This post is based on the Forbes article, Is a Complex Value Chain Squeezing Every Cent from a Barrel of Oil?, by M. Ashraf, June 23, 2021, and the YouTube video, The Terrifying Oil & Gas Shock of 2021|$10 Gas Spike, by MHFIN, July 5, 2021. Image source: Grassetto/iStock/Getty Images.

Discussion Questions:

1. Why are vertical integration and specialization along energy product lines outdated? Are those systems essentially “leaky” barrels?

Guidance: Rockefeller, the Continue reading

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Price Hikes on Toilet Paper and More

Price Hikes on Toilet Paper and More

May 27, 2021

Just when it seemed like the toilet paper crisis was finally under control, Kimberly Clark is making headlines again.

The second largest toilet paper manufacturer in the U.S. is planning hikes to its list prices beginning in June 2021.  This time, the primary disruptor is commodity prices rather than the pandemic hoarding that stripped shelves bare this time last year.


Video Spotlight: 


This post is based on the NBC News article, Toilet paper, diapers, and other consumer products are latest to see price hikes, by Ben Popken, April 1, 2021; the CBS News article,  Coronavirus pandemic forces sharp price hike on consumer goods, by Carter Evans, May 4, 2021; and the YouTube video in the Spotlight. Image source: eldar nurkovic/Shutterstock

Discussion Questions:

1. What products are slated for price hikes?

Guidance: Kimberly Clark reports that prices will increase for baby products such as diapers, adult care products, and Scott bathroom tissue.  The company’s product lines include Cottenelle, Viva, Kleenex, Kotex, and Huggies.

2.  How do the new issues faced by Kimberly Clark differ from those which occurred in Continue reading

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Out of Delivery Drivers and Out of Gas

Out of Delivery Drivers and Out of Gas

 

Gas prices have been going up, and this trend is expected to continue.

Usually, oil shortages fuel this phenomenon, but today, there is an abundant oil supply. The weak link is somewhere else in the supply chain: delivery from refineries to gas stations. During the pandemic, tanker drivers quit their jobs and changed careers. As people are starting to travel again, it is difficult to fill these positions, and the shortage of drivers is being felt at the pump.

 

 


Video Spotlight: No Panic at the Gas Pump


This post is based on the NBC News article, Shortage of Delivery Drivers Means Some Gas Station Pumps Could Run Dry, by P.A. Eisenstein, April 28, 2021, and the YouTube video, Experts Say Drivers Won’t See Difference at Gas Pumps Despite Fuel Driver Shortage, by WBIR Channel 10, April 30, 2021. Image source: kabby/Shutterstock.

Discussion Questions:

1. Describe the widespread workforce shortage in the trucking industry. How does it impact the availability of fuel at gas stations?

Guidance: The shortage of drivers is exacerbated by shortages of dispatchers and office staff, qualified mechanics, registered inspectors, and design-certified engineers. The lack of capacity has created a bottleneck Continue reading

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