If the news yesterday that oil prices topped $69 a barrel seemed like the same old story, you’re right. And it market factors suggest that fuel prices will remain high for years to come.

Oil supplies to the West will continue to be strained by:

• an unstable workforce, such as the current strike by Nigerian oil unions
• artificial supply constraints created by OPEC, and
• efforts by foreign governments either to privatize — as in Venezuela – or to hoard oil supplies in emerging markets, such as China’s controversial investments in African oil fields.

But the most immediate and long lasting impact on fuel supplies is closer to home and due to an unlikely culprit: the lack of skilled labor and construction services to build new refineries. According to a Wall Street Journal article last week, the oil industry is reporting that labor shortages and rising material costs are slowing projects that would add much-needed refining capacity in the U.S. And higher costs are also slowing construction of new refineries abroad.

This crisis came out at the Supply Management 2.0 Forum in Houston earlier in the month when Hess Corporation Supply Chain Leader Carl Tatum told the audience that shortage of construction talent and custom equipment were impacting expansion and maintenance efforts. Tatum even shared a story of what can only be described as extortionary tactics from suppliers of critical parts. “We had no choice but to pay it,” Tatum lamented. “We had to keep operations running.” As noted in a previous Supply Excellence post, such factors have prompted Hess’ supply management team to develop negotiation and supplier management methods to become the “Customer of Choice” of their supply base.

Such dynamics are prevalent across the sector. According to the Journal article, oil refineries report that costs for steel have jumped 74% in the past two years, while the cost of skilled labor in the hurricane battered Gulf Coast has risen 60%. And little relief is in sight, as much of the materials, construction services, and labor is moving offshore where projects are booming and where pressures from environmental and social groups are relatively subdued (or, in some cases, forced into submission).

I’m not going to debate whether such dynamics are the result of self-inflicted wounds due to decades of underinvestment by U.S. oil refineries. (Although the fact that no new refinery has been built in the U.S. since 1976 does raise some questions.) I am merely warning supply managers to build rising fuel costs into their energy and category plans for at least the next five years.