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BUSINESS AND PEAK OIL

Have you ever considered the impact that poor time keeping has on your business?
Have you ever considered the impact that a lack of control on product costs can have?
Have you ever worried about staff motivation and how to maintain the highest of standards in both Customer Service and Output?

These are questions that as a business owner or manager you will face on a regular, perhaps even daily basis. You take every effort to make sure that your business is secure both financially and physically and yet there are issues that will impact on the day to day and longer term operation of your business that you may not have considered.

Peak Oil and the associated cost of fuel.

The phenomena related to the cost of fuel and gaining access to it has become known as ‘Peak Oil’, a term originally used to describe the point when an oil reserve is more than 50% consumed.

Recent news reports highlighted the new finds of oil in the Gulf of Mexico, the recent exploration under the Artic Sea Ice and other finds and refinements of the Oil Shale sands in Alaska. This, it has been argued, proves that there is still a large amount of oil and natural gas yet to be tapped. It also shows, in the case of the Oil Sands, that there is an alternative source if the more traditional fields were to run low.

The issue however stems not from the fact that there is not enough oil in the ground but the fact that there has not been suitable investment into the infrastructure to take the oil from the oil fields and bring it to the refineries.

The Gulf of Mexico is the body of water that helps turn tropical storms into Hurricanes, so how safe would the oil rigs be?

The Artic Circle is one of the most hostile places on earth, so even if the ice is gone in the summer what happens to the rigs, plant equipment in winter?

Shale Oil has to be heated by steam or dug out by digger in order for it to be processed, so it is not just a case of digging a well. Also how do you make the steam?

In other words it is no good knowing where it is if we can not get to it or afford to get to it. It is also not enough to hope that the calculated reserves will actually match the amount in the ground. It is, after all, only an estimate.

In short there are serious issues here. In fact it was so serious that the Bush Administration conducted a study and recognised the issue in the Hirsch report of 2005.

It recognised the impact on manufacturing, production and distribution that any disruption or restriction of oil could have. In our own lives too we have seen how Fuel blockades and Industrial Action impacts on our day to day lives. There are not only shortages at petrol stations but also knock on impacts on retail outlets and in services.

Now imagine if that was to become the norm, not the exception. Once you have reached that point it is also important to understand that travel and transport costs are just one of the many pressures, some common place, some emerging into public consciousness and some starting to be predicted, that will impact on small and medium sized businesses in the near future.

With gross profit margins being squeezed on a regular basis a sudden increase in fuel costs will impact on all sides of your business. From the cost of transporting goods in for manufacturing or sale to shipping them out to customers, from costs for heating of office and energy for manufacturing to electrical power to support ICT or web based businesses, there will be an impact.

The last 100 years has seen businesses become dependant on oil, coal and gas for the energy that enables them to function. Now there is a risk that these resources may become restricted.

So what can you do? You are, after all, only one business. You are also unique and therefore concerned that any suggestions, whilst fine in theory may be too expensive to put into effect or not relevant to how you choose to work.

Grants are avaliable to reduce Carbon Emissions from Businesses and advice is avaliable to help reduce transport costs. Organisations such as The Carbon Trust are there to help but they can only help if you, the Business owner, identifies the areas of concern.

How can you do that?

Well the first step is to realise that, despite being only one business, it is part of our wider business community.

Often commentators and legislators will talk of the business community but never really define it or explain what they mean. If we take the business community to be everyone involved with small and medium enterprises, be they in the private sector, voluntary or public sectors then that would mean there is a large, untapped, resource of both experience and knowledge to guide you.

From sign posting to detailed guidance from experts, it is out there. The trick is in working together to find it.

So take a few minutes to consider just how ready your business is for the changing world we live in, start to plan how you will make it better, ask the questions that are on your mind and together, as a business community, we can find the answers.