Businesses Confront Oil Reality
By Jane Han
Staff Reporter
What used to be a possibility before, became reality when oil passed the $100 milestone for the first time Wednesday. Now, companies ― mainly in the manufacturing sector ― are left facing the era of triple-digit crude oil prices.
Manufacturers in general are expected to suffer, as a barrel of petroleum that they paid $60 for just a year ago is now costing them 60 to 70 percent more.
Among the oil price-sensitive industrialists, textile, fiber synthetics producers and airliners are bracing to take a direct hit, while automobile, electronics and food manufacturers are also expected to be affected by sinking consumer sentiment.
``Textile mills require heavy amounts of oil to operate, but many of our outputs are everyday consumer products, which makes it hard for us to suddenly raise prices tomorrow,'' said a spokesman of the Korea Federation of Textile Industries.
Highly oil-dependent airlines are also squeezed by the $100-a-barrel news, so much that some are even considering raising ticket prices or shutting down unprofitable routes.
In the auto industry, carmakers are left to deal with consumers shying away from buying in worries about footing skyrocketing gas prices.
``More car manufacturers will turn to developing high-efficient, economical cars,'' said a spokesman of Kia Motors.
Local retailers that prepare ahead of time in case of poor sales due to grim consumer sentiment have begun cutting operation costs.
Lotte Department Store starting last month adjusted its central heating system to maintain a 20 degree Celsius indoor temperature, down 3 degrees from last year, according to company officials.
Although companies will continue to moan, there are also the lucky few that will enjoy the oil spike.
Particularly, the shipping industry that typically require less oil for operation isn't expecting a crippling hit, but rather optimistic that it would give them a chance to actively develop deep sea oil projects.