Last Sunday we hosted a football party for our high school boys team to celebrate winning the state championship in November. Everyone signed the back of the section, region and state championship trophies. The celebration was delayed by supply chain issues. At the West Virginia State tournament, there were no team trophies. They simulated a trophy so each champion could lift a championship trophy, take a few shots, and return it. We finally received the trophy that we could keep at the end of February.
Supply chain issues affect us all in many ways. Products of all types are delayed in reaching us. Costs have increased. Shipping a 40ft sea container from Asia to the United States usually costs between $2,000 and $3,000. Last summer, the cost doubled to around $6,000. Today, that cost is over $20,000. The ships were delayed unloading in California. Other ports now receive ships from Asia. In Virginia Beach for a conference at the end of January, we saw container ships lined up as far as the eye could see. We have been traveling to Virginia Beach regularly since our son joined the Navy in the 1980’s. We have never seen anything like it. Ships are unloaded and their cargo is much closer to us than the west coast.
At the World Petrochemical Conference last week, an entire day before the main conference was devoted to supply chains. Progress is underway. In addition to using more US ports, they are using technology to locate and eliminate bottlenecks. Even with improvements, we were told that supply chain issues would not be resolved until late 2023 or 2024. The good news is that companies are moving from global supply chains to global supply chains. regional.
When Intel announced its new microchip factory outside of Columbus a few weeks ago, they announced that all of their suppliers would be within 500 miles of Columbus. A manufacturing company in the region said it has eliminated all supplies from China and is now supplied by American companies. They also sell all of their products in the United States. I spoke this week to a local factory manager who told me that 80% of their supplies now come from the United States. Less than four years ago, 60% of their supplies came from Asia. Regional supply chains create local jobs and are more reliable than global supply chains.
The biggest problem companies are currently facing is finding workers. At the last West Virginia Manufacturers Association meeting in December, every company I spoke to was hiring. At the WPC, the CEO of a major manufacturing company from Shale Crescent USA came to the lunch we hosted with Jobs Ohio. He needs 200 new employees for an expansion and has asked for our help. If he can’t find employees in our area for more than $20 an hour, their alternative is Mexico.
The return of manufacturing and supply chains to the United States is made possible by our abundant, reliable and economical energy, primarily natural gas and oil. In recent years, we have heard a lot about energy transition. Typically this means moving from our current fossil fuels to whatever energy of the future it may be. Any future source of energy must be reliable 24/7, economical, and available in abundance to everyone, rich or poor.
In the 1970s, it seemed like we were running out of oil and natural gas. At WVU, we were told there was only a nine-year supply of natural gas. We thought we were making the transition to a nuclear-powered world. Nuclear engineering was the hot topic. Then came the disasters of Chernobyl and Three Mile Island, followed by the American energy crisis ended by the shale revolution.
Recent conferences I have attended have changed the direction of decarbonization, Navigating to Net Zero, and the energy transition to energy security. Europe’s energy problems, like our rising gasoline prices, began long before the war in Ukraine. US gasoline rose $1.50 to $3.50 in just over a year. Ukraine drove prices up another $0.50, similar to the hurricanes. Ukraine underlined Europe’s dependence on Russian natural gas, a source of energy independent of weather conditions.
BASF, a major German chemical company, announced this week in Chemical Week Magazine that a 50% reduction in natural gas supply would lead to the closure of its German chemical complex. Net Zero will not be a problem. Unemployment will occur when thousands of manufacturing and support jobs are lost, along with the products they make, which will impact even more people. Currently, Europe has very little energy security.
At the WPC, we heard that China and India are focused on energy security, not decarbonization. This means increased use of coal for electricity and oil as a petrochemical feedstock for products. Businesses cannot exist without reliable energy. The United States is blessed with over 24% of the world’s natural gas supply and is the world’s largest oil producer. Together, the United States and Russia control more than 40% of the world’s natural gas. Companies come to the United States and Shale Crescent USA because of energy, raw material, and supply chain security.
How will a focus on energy security instead of decarbonization impact global emissions? India, China and Russia were not focusing on emissions anyway. China’s emissions have not peaked. Bringing industry back to the United States to use our energy, operating under US environmental law with regional supply chains has the potential to do what governments and environmental groups could never do, reduce global emissions . We must learn from Europe’s mistakes and not repeat them.
Our men’s soccer team has learned that it takes an entire season of hard work, learning from adversity and teamwork to become a champion. We’ve celebrated a lot of small successes along the way. Losing weight, developing our future energy, and creating a cleaner planet can happen the same way as becoming a champion team, through small successes that are appreciated and celebrated. If we all work together and start creating small successes, maybe next fall’s champions won’t have to wait for their trophy.
Greg Kozera, [email protected] is the Director of Marketing and Sales for Shale Crescent USA. He is a professional engineer with a master’s degree in environmental engineering and over 40 years of experience in the energy industry. Greg is a leadership expert, high school soccer coach, professional speaker, author of four books and numerous published articles.