Strategy

Finance Execs: Energy Prices Not a Worry

Most businesses aren't fazed by this past year's high electricity and oil costs, according to a recent survey, and finance executives predict futur...
Stephen TaubOctober 17, 2006

Finance professionals are confident the energy crisis has passed.

According to a new survey of treasury and finance professionals conducted earlier this week at the Association for Financial Professionals (AFP) Annual Conference, just 12 percent expect significant increases in the price of electricity.

On the other hand, a majority (52 percent) of the 735 finance pros who participated in the survey expect a “slight” increase for electricity pricing over the next year. And nearly half said they expect only a slight increase in oil prices in the next 12 months.

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The finance executives were also fairly upbeat about the macro direction of energy prices, with 35 percent asserting that petroleum prices will remain stable or even drop over the next year. In addition, most finance pros said their companies weren’t hurt badly by the recent run-up in energy prices.

According to the survey, 14 percent experienced a significant drop in profitability resulting from the volatility in energy costs. What’s more, 70 percent reported no impact on the demand for their goods or services as energy prices increased.

“The survey results show that recent energy price volatility has not had a major impact on business,” AFP president and CEO Jim Kaitz said in a press release.

To offset this past year’s higher energy prices, 22 percent of the survey respondents’ organizations raised the prices of their goods and services. More than 20 percent used risk management techniques, including hedging and options strategies, 18 percent relied on a greater use of energy efficient processes, while 16 percent reduced employee travel.