UP FRONTA LETTER FROM THE EDITOR Fill Up Your Tank—and Find a New Playbook u A
few years back, the US Energy Information Adminis- tration predicted that the US would achieve energy self-suffi ciency in two decades. Thanks largely to fracking, the US was on its way to becoming the world’s top producer of petroleum and natural gas hydrocarbons. If only that game-changing prediction came with a new playbook. The surge in supply has caused the price of oil to fall by
more than half since June. As of press time, prices were headed for $40 a barrel, a Saudi prince told USA Today that we’ll never see $100-a-barrel oil again, and OPEC had no plans to cut production. The national average price of gas, meanwhile, had fallen to $2.13 per gallon, according to AAA. But what’s great for consumers isn’t necessarily good news for manufacturers. Let’s start with those who make oil and gas parts. Until
recently, they been buzzing about the fracking boom, making pipes, pumps and other oil fi eld parts just about as fast as they could. But at these prices? Fracking projects start to lose economic sense below $80-90 a barrel. If this price drop is temporary, they can have a good laugh in a few weeks and
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AdvancedManufacturing.org | February 2015
keep drilling and pumping. But if not? ... In the auto industry, meanwhile, sustained low oil prices could also disrupt tough mandates on automakers to im- prove their Corporate Average Fuel Economy, or CAFE. At the 2015 North American International Auto Show,
Chevrolet showed off a Bolt concept car that gets 200-plus miles of electric range, and the Ford F-150, which features a lightweight aluminum body, won Truck of the Year. But with these gas prices, are consumers going to pay for these fuel-effi cient models—and support the billions of dol- lars in R&D and manufacturing investments going on behind the scenes for them? We already know the answer to this, of course, because consumers are quite predictable. In the face of low gas prices, pickup and SUV sales have been rocking, car sales have been weak and sales of hybrids and electric models have been left wanting. If this trend continues, you can bet that some automak- ers will be pushing to roll back CAFE rules during the 2017 midterm review. Or, framed another way, they will be fi ghting for the rules to refl ect true consumer demand.
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Although reasonable efforts are taken to ensure the accuracy of its published material, SME is not responsible for statements published in this magazine. Readers are advised that SME shall not be liable to any person or company for losses or damages incurred as a result of accepting any invitation or offer contained in any advertisement published in Manufacturing Engineering®. Copyright © 2015 by SME. Photocopy information: Users registered with the Copyright Clearance Center, 21 Congress St., Salem, MA 01970, can purchase copies at $2.00 each referring to serial fee code 0361-0853/88/$2.00. All other photocopying without the permission of SME is prohibited. Reprint information: For tearsheets, reprints, and bulk orders, write the Production Manager, kstebbins@sme. org. Available on microfi lm/ microfi che from University Microfi lms International, 300 N. Zeeb Rd., Ann Arbor, MI 48106. Canada Post Publication Mail Sales Agreement No. 1436813
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