CFOs Weigh In on Price of Oil and the War
How does the price of oil and the war affect CEO confidence in the economy? CFO.com’s survey of CFOs reveals:
…the price of oil and war in the Middle East are weighing heaviest on the minds of senior financial executives. By a wide margin, they regard the cost of energy as the most serious roadblock to economic prosperity, with a whopping 62 percent of 135 finance chiefs expressing that view. The housing market slump and the federal budget deficit, both at 40 percent, and the descent in the value of the U.S. dollar, at 37 percent, trailed far behind.
This is very important because many oil industry experts believe that the price of oil will continue to rise. What if it does? Are we in a perpetual downturn? Of course not. People will change their habits and demand, more forcefully, alternative fuel and transportation development. Also, those alternatives will become economically feasible once the price of oil and related products increases to certain levels. Our attitudes about nuclear energy will probably change quite a bit in the next year or so.
I believe that we have to simply accept the price of oil and quit saying it has to fall in order for our economic conditions to improve. We will adjust, as we always have, and the economy will come roaring back.
How do you see it? If oil prices never fall, and continue to rise, can our economy improve?
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The slow turn has commenced already; my family has been the automotive retailing businesses for years, is cutting back inventories of SUV’s and gas hogs- cant sell them, and incentives aren’t helping.
If the USA war commitments are scaled back appreciably, especially Iraq, the decrease in petro demand will have an important impact on commodity prices, perhaps 10.00 barrel.
Alan- thanks for commenting. The war commitment insight is very interesting. I would have thought that a scaling back would cause more instability and thus an increase in barrel pricing. But I hadn’t thought of the demand implications. Do you have some numbers to support this that you could share or guide me to? I would really appreciate it and would like to post on this. I’ve also heard about big changes in supply chains (less route/more full truck loads, competitors sharing trucks, increases in now viable distribution centers) that indicate a permanence to the increasing oil prices.