Jim Simon of Hudson, Fla., always wanted to own his own semi. So,
this March, he bought a red 1982 Ford LTO 9000-loaded with a
microwave, full-size bed, and more drawer space than he has at
home. But now the beloved truck is for sale - a casualty of the
high price of oil.
"We have to park it, or we'll lose everything," says Julie Simon,
his wife. "After we get through with fuel costs, we're not making
Mr. Simon is not alone. With the price of oil remaining high, big
energy users like semiconductor manufacturers, paper companies, and
airlines are feeling the pinch. For some, their energy costs have
risen to the point that they are faced with the unpleasant prospect
of either raising prices or reducing their operations.
"Costs are going up, it's not just the consumer who's feeling
it," says David Wyss, chief economist for Standard & Poors DRI in
Although the higher energy prices have not worked their way into
the consumer price index yet, government officials are worried.
Recently, US Energy Secretary Bill Richardson said oil prices are
With oil prices closing in on $40 a barrel, President Clinton
says he's looking closely at the prospect of opening up the
Strategic Petroleum Reserve (SPR). This would help to relieve some
of the political pressure, although it's not clear what impact it
might have on the world price.
"It could knock the price down, as long as OPEC does not reduce
production," says Mr. Wyss.
However, the political heat is rising. Next Tuesday, the Senate
Energy Committee will hold hearings with Secretary Richardson and
other energy experts. Governors are also worrying about the coming
winter. Yesterday, Gov. Bob Taft of Ohio and Gov. Tony Knowles of
Alaska held an energy summit in Columbus, Ohio, with natural-gas
producers to talk about the high prices.
"We're going to have a winter that will be a challenge for all of
us," says Governor Taft.
For many businesses, it's already a challenge. Take the chemical
industry, which consumes about 6 to 7 percent of all the energy used
in the United States. Basic energy costs are up about 60 percent
over last year, calculates Kevin Swift, chief economist for the
Chemical Manufacturers Association. "I'm starting to hear
grumbling," says Mr. Swift.
Normally, the industry would raise prices to recoup its higher
costs. And to some extent, it has. The price of plastics has risen
21 percent over last year. …