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Are high fuel prices draining the global economy?

Hydrocarbon Engineering,

The carriers and manufacturers of transport oriented capital goods are expecting an era of higher energy prices and increased regulations. This is according to transportation executives who were surveyed for the Transportation Outlook study released by CIT Group Inc.

Jeff Knittel, President of CIT Transportation Finance said, ‘this study highlights the fact that transportation executives are preparing for a future of uncertainty, both in terms of fuel prices and regulations. In doing so, they are implementing strategic business plans in response to the potential for a protracted era of higher energy costs and growing concerns regarding current and proposed emissions regulations.’

Key findings

Fuel prices and rising energy costs are impacting the global economy

More than 81% of the executives surveyed said that uncertainty surrounding energy policies is hampering global economic recovery. 80% of the executives went on to say that today’s higher fuel costs are reducing global economic growth. They also believe that the global economy is poised for a protracted period of increasing energy costs. 63% believe that prices will increase over the next 18 months, 78% expect prices to increase over the next three years and 69% believe prices will increase over the next 5 years.

Regulations from the US, EU and other governments are hurting consumers

According to 66% of the respondents believe that government policies have driven energy prices higher. 83% of the executives interviewed agreed with the statement that relatively high fuel prices are contributing to higher consumer costs, and 81% agree that higher fuel prices are impacting consumer spending in other categories.

Regulatory activism over emissions is cause for concern

76% of transportation executives are apparently concerned by current and proposed emissions regulations, with 47% of them saying that the state of emission regulation is contributing to higher energy costs. 86% said that such emission regulations are adding to overall operating costs.

Oil and natural gas are the most critical fuels

94% of the respondents consider oil an important fuel for their respective company, while 90% said the same of natural gas. The figures drop sharply for coal. Only 55% of those surveyed use it for fuel and only 34% extensively. 76% of respondents involved in the rail industry said that coal is important, presumably reflecting its value as a freight fuel. 

Adapted from press release by Claira Lloyd

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