While everyone’s become excruciatingly aware of the soaring price of gasoline, very few people are likely to know that talent shortages in the highly complex world of oil refining have become a significant trigger behind those runaway prices.
Rising demand, reduced domestic production, pipeline shutdowns, crackdowns on leases, and Russia’s invasion of Ukraine are all well-known contributors to a global surge in gas prices, with per-gallon stickers in the U.S. now topping $5 and in some places well over $6.
But talent shortages? That’s one I hadn’t heard until I saw it mentioned last week in a blog post from SAP called The Take: Oil Refiners and Gasoline Prices. Here’s the relevant excerpt:
“Refiners were hard hit by the coronavirus pandemic in early 2020 when demand for gasoline and other products derived from oil plunged and many refineries had to close their operations,” said Benjamin Beberness, global VP of Oil, Gas, and Energy at SAP. “Now that demand has increased, refiners are facing a shortage of skilled labor.”
The SAP article goes on to say that as the pandemic sent the global economy into a tailspin in early 2020, demand for oil dropped significantly and refiners cut back production by about 3 million barrels per day.
But as the post-pandemic return to normalcy ratcheted up purchasing across industry sectors, refiners have not been able to keep pace with increased demand for a variety of interrelated reasons, including that talent gap, SAP said. Here’s one more excerpt from that article:
Refineries are complex, and once shut down or shut-in it can be hard to get them to full capacity again. That has made it difficult for oil refiners to respond quickly to the rebound in consumer and industrial demand for gasoline, diesel, and jet fuel.
“While some companies have shut down their least efficient refineries, other companies have taken the opportunity to perform planned maintenance or turnarounds. Unfortunately, this means it could be some time before refining capacity is restored to pre-pandemic levels,” Beberness said.
I find this analysis from SAP to be intriguing on two fronts. First, it marks yet one more example of the increasingly vital nature of talent in every industry, and the calamitous repercussions of being unable to bring to align talent and skills with rapidly changing market requirements and expectations that have become the norm in today’s tumultuous world.
Second, we are beginning to see more and more technology companies step out with industry-specific research, commentary, and points of view with regard to those highly disruptive market dynamics that are becoming commonplace. In this piece, we see SAP energy leader Beberness offering perspectives on the energy industry that have nothing to do with SAP products, software, the cloud, or code.
Last week, we saw another example of this with a blog post from Google Cloud about a survey of more than 2,000 business leaders showing that retail executives believe that sustainability initiatives are much more important than — if you’re not sitting down already, please do so — optimizing your business models, attracting and retaining world-class talent, and driving revenue growth.
From those and other examples, we see powerful evidence that industry clouds and industry-specific solutions are going to rapidly become the norm for business applications because the increasingly complex data-driven processes of the digital economy are simply outstripping the capabilities of horizontal apps.
As that takes place, we will continue to see business customers look to the Cloud Wars Top 10 and other tech vendors to deliver not just the tech products they’re creating but also the market-specific knowledge and insights that they’ve accumulated over the past 5 or 10 or 25 years.
Those customers want more than just what a cloud vendor is selling — they want what that company knows. The pairing of that deep vertical expertise with the new breed of industry-specific solutions coming onto the market is likely to shape the next wave of innovation and growth in the Cloud Wars.