Why an IT Roadmap? 1. Creates an opportunity to better align business and IT initiatives. The Business Plan drives the IT projects. Helps the organization migrate from limiting the focus on market share, to becoming a market maker. 2. Enhances communications with employees, partners, stakeholders, providers and customers. Confirms everyone is on the same page. 3. Crystallizes the business drivers. Why are we doing this project? How does this fit into the overall plan? Helps in capturing tangible benefits. 4. Financial-drives the operating and capital budget activities to maximize the “bang for the buck”. Establishes/expands financial control and reporting. 5. Operational-Helps identify critical success factors and provides the platform for key performance indicators. Maximizes current business processes and information flow. 6. Documents the current IT environment and sets the stage for development efforts to meet business needs. 7. Results in a crisp statement of priorities and assists in the resolution of current “pain points”. Assures razor-sharp focus on critical enterprise activities. 8. Work is performed by an experienced, objective, outside consultant. Becomes the tool for transformation from current state to future state.

Spiking Gasoline Prices Hammer Economic Recovery

January 16, 2011

Rising gasoline prices are hammering the U.S. economic recovery.  Gasoline prices have been steadily climbing over the last few weeks, wreaking havoc with the U.S. economy.  CNN (WWW.cnnmoney.com), Fox news (www.foxnews.com) and Consumer Reports (www.consumerreports.org) all report a substantial increase in the cost of a gallon of unleaded regular for the week of January 10, 2011.  Nationwide the average price has spiraled to a whopping $3.09, up 19 cents since the first of the year, and an increase of 34 percent compared to last year.   This is the highest average gasoline price since October 2008. 

The price of oil continues to hover above the $90 level.  Oil closed at $91.54 on Friday, Jan 14, 2011.  The Wall Street Journal (www.wsj.com) reports that for every $15 increase in the price of oil there is a 1 percent decrease in U.S. GDP.

Energy analysts are somewhat baffled by this spike.  Historically, we don’t see this type of spike until later in spring when people start driving more and thinking about spring break or summer vacations.  Normally, at this time of year, consumers are driving less, paying off credit cards from holiday usage and trying to survive.  Gas supply is still strong; refineries are operating at peak levels, and there are no unusual outside factors driving the current spike.  Economists have noted the unusually warm fall weather, followed by a substantial snow storm across much of the countryside, have influenced the overall price.  Overall, consumers are driving less, some caused by rising gasoline prices, but also the large number of unemployed workers and uncertainty about the U.S. economy.  

It is way too early to develop accurate forecasts for 2011 and beyond, there is no indication that 2011 will be anything different that 2010.  Although future trends are extremely risky to predict, there are some prognosticators who have put forth a number of interesting hypotheses:

• John Hofmeister, the former president of Shell USA and the author of “Why we Hate the Oil Companies,” and founder of Citizens for Affordable Energy (www.citizensforaffordableenergy.org) predicts Americans will pay $5 per gallon of gasoline by 2012.
• Gasoline expert Fred Rozell predicts that 15 states, including Hawaii and Alaska, will see gasoline prices top $4 by Memorial Day 2011.
• The Energy Information Administration’s (www.eia.doe.gov) latest gasoline price forecast estimates that regular-grade motor gasoline’s retail prices will average $3.17 a gallon this year, 39 cents per gallon higher than last year.

 

What’s causing the spike?  Experts really don’t know.  Rising crude oil prices surely have an impact; but beyond that, the experts can only speculate.  Some economists have blamed the increase on China’s rising energy demand; while investors blame the spike on lack of confidence in the U.S. economic recovery and world financial crisis. 

What remains clear is that rising energy prices will negatively impact the U.S. economic recovery in 2011 and beyond.

Three Dollar Gasoline

Three Dollar Gasoline

Coming soon to a gas station near you!

February 12, 2010

Most energy analysts think American consumers will continue to see spikes in gasoline prices throughout  2010.  So far this year we have seen average prices for a gallon of unleaded gasoline run up in price to $2.733 in mid-January.  February 2010 has seen a decline in average nationwide prices to $2.669 according to Tom Kloza of the Oil Price Information Service.    According to Lundberg’s, the average price per gallon of unleaded regular fell to $2.67 for the week of February 5, 2010.

Although some states have already pierced the $3.00 per gal plateau this year, (namely California, Hawaii and Alaska due to taxes and local conditions) experts don’t see the nationwide average exceeding $3.00 any time in 2010. 

“We will probably see $3/gal for a national average sometime this year but barring significant unrest in the Middle East, it’s highly unlikely we will see a super spike in retail gasoline prices witnessed in 2008”, said Troy Green,  national spokesman for the American Automobile Association.   

Although forecasting future gasoline prices is a fairly risky business, there are some factors that influence the gasoline price at the pump.  From the supply side:

• Inventories are still significantly large; The Department of Energy and the American Petroleum Institute both reported a substantial increase in gasoline inventories for the week of January 22, 2010.
• Refineries-production is 77 percent of capacity with several east coast refineries in New Jersey and Delaware permanently shut down.
• Oil prices continue in the $70-80 range.
• Drilling rig count-up +18 to 1335 for the week of Feb 5 according to Baker Hughes.

From the demand side:

• Consumption-people are driving less (as reported by the Federal Highway Commission) as the recession continues to effect jobs, manufacturing and standard of living for many consumers.  The Energy Information Agency reports that motor gasoline demand was down0.2% for the week of Jan 15, 2010.
• The economy as a whole is continuing its long, slow recovery as the market sends mixed signals to Wall Street and global investors.
• Weather-cold weather and several winter storms continue to dampen demand; several tankers have been unable to unload at east coast terminals because of heavy snow.   Demand for heating oil will shrink as the temperature warms up in spring.
• World consumption of crude oil-analysts believe the once rock solid demand for crude from China and India may soften as world economies try to recovery from the 2009 recession. 

Tom Kloza, chief oil analyst at the Oil Price Information Service says “Motorists tend to do less driving in ice and snow, and holiday bills on kitchen counters and empty merchant parking lots on weekdays.  Underemployment levels of greater than 17% also have altered behavior.” 

Although the prospect of rising gasoline prices may not be the same tipping point as we saw in 2008 at $4 gasoline, it has the promise of being a significant influence in 2010 and beyond as the U.S. and the rest of the world try to climb out of the worst recession in years.