Record high oil prices are affecting the entire economy forcing major players to adapt to problems never before seen on the market.
Major agricultural producers are looking towards energy and biodiesel, airlines are rethinking their sales strategies, transporters have increased prices by as much as 20%, and food producers say we shall have a "hot" summer due to the unprecedented increase in oil prices.
A few days ago oil prices hit a record high of 135 dollars per barrel and apart from companies that have reserves, which stand to gain, other economic segments are being seriously harmed - from the refining industry right through to the food sector.
Losses incurred as a result of these increases cannot be born by economic operators, and will eventually translate in retail prices to end consumers. In the last phase, this will have a major impact on the population's consumption habits.
"(...) Internationally, we are already witnessing a shrinking appetite for travel. In this context, the population's income is also dwindling and consumption habits will change. People will rather save than travel (...)," said Sorin Georgescu, marketing and sales manager with TAROM, the national carrier.
"Pressures are bearable for the time being, but after the summer period I believe we'll start to see the real effects of this situation. Ticket prices will rise due to higher oil taxes, which will also affect demand. We do not plan to give up people or destinations, but we will be forced to devise strategies as we go because the industry has never encountered such a situation," he says. Low-cost airlines will not be able to avoid this situation, either.
Domestic couriers have also been affected and say tariffs may rise by around 20% starting the middle of this year on fuel costs. Agriculture is another sector that will suffer, with grain prices having already doubled against 2007. Major land owners are already looking to energy production, after they began to use biodiesel to slash fuel costs.
Food, meat, dairy and oil producers are also feeling the pinch of rising oil prices through the additional costs related to raw materials and the transportation of finished products.
The rising oil prices are also hurting the construction materials market.
According to the latest information, prices of construction materials are expected to increase this year by over 10-15% for the main types of materials due to indirect costs generated by higher oil prices and electricity costs.
The more expensive oil barrel also has a direct impact on natural gas distributors, which will ask for a 20% rate hike in July 1 due to high procurement costs. Refiners must also cope with high costs due to the rising oil prices.
The companies that stand to gain include those that deliver equipment to the oil industry and of course companies that have their own crude oil production business.
Rising oil prices
Record high oil prices are affecting the entire economy forcing major players to adapt to problems never before seen on the market.
Major agricultural producers are looking towards energy and biodiesel, airlines are rethinking their sales strategies, transporters have increased prices by as much as 20%, and food producers say we shall have a "hot" summer due to the unprecedented increase in oil prices.v
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