Cost Insights
by PowerAdvocate

Intelligence for energy companies seeking a data-driven approach to cost management

PowerAdvocate


Recent Posts

Impact of Potential Labor Shortages on Costs for North American Utilities

June 17, 2021 at 12:27 PM / by PowerAdvocate posted in Industry Insights, Power & Utilities

President Biden’s proposed $2T investment plan could strain an already tight labor market servicing utilities. As demand for various construction services increase, North American utilities will need to accomplish the same or greater levels of work compared to the past, but with a more constrained supply base. As a result, utilities must think about the potential higher costs that result from labor shortages.

Read More >>

Strategies for Offsetting Inflation in the Utility Industry

June 9, 2021 at 12:02 PM / by PowerAdvocate posted in Industry Insights, Power & Utilities

Across the top areas of spend in the North American utility industry, our models reveal that costs for utilities have increased dramatically in the last year, upwards of 16%, and are forecasted to climb around 3% in a single quarter by the end of Q2 2021.

In our most recent whitepaper, we examine how supply chain professionals can confidently rise to the challenge by demonstrating they can offset the impact of inflation on an ongoing basis. 

Read More >>

North Sea Spend Market Report

June 9, 2021 at 11:54 AM / by PowerAdvocate posted in Industry Insights, Power & Utilities

Volatile markets can have an adverse effect on operators, especially when having to purchase products and services off contract. For example, with Equipment Maintenance Services 8% off contract on average and costs expected to rebound c.3% by April 2022, operators must be prepared to manage their spend effectively to mitigate market changes.

Read More >>

The Impact of Biden's Infrastructure Bill on a Constrained Labor Market

May 27, 2021 at 4:14 PM / by PowerAdvocate posted in Industry Insights, Power & Utilities

The US construction sector is facing a confluence of supply chain disruptionscost increases, and worker shortages as the economic recovery from the pandemic acceleratesNow, President Biden’s proposed plan to invest $2T over 8 years in infrastructure could further boost demand for construction services, putting even more pressure on the limited labor supplies providing services to energy firms. 

PowerAdvocate’s analysis of the proposed investments in roads, bridges, power transmission networks, and other physical infrastructure shows that higher demand will impact some craft labor types more than others. As the chart shows, demand is expected to exceed supply for several key crafts in the first year of the plan, with heavy equipment operators and electrical power line installers seeing the severest shortagesBoth crafts saw minimal job losses in 2020 amid pandemic-related work stoppages and are currently near full capacity with few qualified workers remaining joblessMeanwhile, both will see significantly higher demand if the infrastructure bill passes CongressAt a national level, PowerAdvocate forecasts that construction sector employers could face a shortage of 27,000 heavy equipment operators, or nearly 7% of the currently employed labor force of 405,000. For electrical power line installers, we forecast a shortage of 21,000 workers, or 18% of the current labor force of 114,000.  

Labor shortages are a major risk for energy firms, impacting everything from costs, to safety, to project continuity. PowerAdvocate works with firms to quantify their exposure to these shortages and execute key supply chain strategies to mitigate the risk, including managing demand, improving supplier productivity, and enhancing volume commitments. 

Read More >>

Europe O&G: 2021 Upstream Market Forecasts

March 9, 2021 at 10:13 AM / by PowerAdvocate posted in Industry Insights, Oil & Gas

2021 marks an opportunity for upstream operators to overcome cost challenges presented amid last year's turbulent market through appropriate CapEx and OpEx forecasting. 

In our latest market report, we provide cost forecasts for key CapEx & OpEx categories and outline why we see cost increases across almost all of them which are forecast to rise between ~1%-12% between February 2021 and January 2022. 

Some of the top categories with notable inflationary/deflationary trends included in the report are: 

  • CapEx: OCTG, onshore & offshore drilling rigs, and wellhead equipment services
  • OpEx: Production chemicals, compression services, and offshore support vessels

As operators focus on optimizing their costs in 2021, it is key to leverage market forecasts to estimate key cost changes and forecast spend. 

Market Forecast Overall Weighted Trend Based on Brent Crude Spot Price Scenarios

Read More >>

Europe O&G: 2021 Downstream Market Reflections

February 8, 2021 at 3:24 PM / by PowerAdvocate posted in Industry Insights, Oil & Gas

2020 has been a volatile year for downstream supply markets, and several key cost categories have moved sharply. For example, since last January,

  • Hot-Rolled Coil Steel costs have increased by 40%+
  • Copper costs have increased by 16%+
  • Organic Basic Chemicals costs have decreased by 4%+

As operators refine their CapEx and OpEx programs for 2021, we have found that it is important to understand both how key downstream commodities have trended, and the impacts of those trends on key cost categories – for example, the 16%+ increase in copper costs contributed to a 7%+ increase in Electrical Supplies.

Read More >>

Europe O&G: 2020 Upstream Cost Top Movers

December 17, 2020 at 10:34 AM / by PowerAdvocate posted in Industry Insights, Oil & Gas

2020 has been a volatile year for upstream supply markets in Europe, and several key cost categories have experienced inflationary pressure. For example, since January,

  • Screen costs have increased by 16.6%
  • Generator costs have increased by 11.7%
  • Carbon Steel Pipe costs have increased by 11.3%

Understanding how key cost markets are trending unlocks value across the entire cost management lifecycle:  from identifying market-driven opportunities and risks to support category strategy development, to executing data-driven vendor negotiations, to tying contracts to favorable indices to underpin contract resilience.

Our team recently put together a list of upstream cost categories which experienced the most inflationary pressure during 2020. 

 

Read More >>

Accelerating Supplier Diversity Programs

October 20, 2020 at 4:23 PM / by PowerAdvocate posted in Power & Utilities

This year's economic, cultural, and health environment has elevated the industry's focus on supplier diversity initiatives. As an example, over 50% of the top 25 investor-owned utilities in the US referenced the topic in their Q2 earnings call, vs. just 20% in Q2 of last year. However, data and resource challenges can often hinder progress to stated diversity program goals.

Read More >>

A Narrowing Opportunity for Mining Supply Chains

July 14, 2020 at 8:37 PM / by PowerAdvocate posted in Cost Reduction, Industry Insights, Mining

As commodity markets rebound, the window of opportunity for mining operators to drive supply chain savings is narrowing.

In this discussion, we look at:

  • Recent trends in commodity metals pricing
  • How these trends represent a strategic – and narrowing – opportunity for mining operators to capture savings
  • Key components of a strategic roadmap for how mining supply chains can effectively leverage current market conditions to achieve market-based savings and protect against future inflation risk
Read More >>

What COVID-19 Means for Your Supply of Mining Tires

June 1, 2020 at 4:21 PM / by PowerAdvocate posted in Cost Reduction, Industry Insights, Mining

In this discussion we look at the building blocks needed to understand supply chain risk across the enterprise and dig deep into the cost structure of mining tires to answer the following questions:

  • What are the drivers behind the rise and fall of mining tire prices in different regions?
  • What are the bottlenecks with your supply of mining tires?
  • What does the future look like for key mining tire suppliers?
Read More >>
Subscribe to Cost Insights

Join thousands of energy industry leaders and receive regular insights to help your organization manage costs more intelligently

Request more information about our Data and Cost Reduction Technology Suite: