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Rising Fuel Costs and US Transport Industry - Essay Example

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The effects of the rise in fuel are on a global scale, with the transport industry being the hardest hit owing to its operational dependence on oil. When fuel becomes expensive, commuters not only change their traveling habits, they are also forced to part with more cash (Coyle, Bardi & Novack, 2006)…
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Rising Fuel Costs and US Transport Industry
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Consequently, comfort is often sacrificed in an attempt to cut back on the fuel budget. Often, Americans have had to make do with fewer cars, or shift to fuel efficient ones. In addition, car pooling has become a common practice among friends and families while air travel is not only restricted, but also limited to either official travels, or longer journeys that would otherwise be uneconomical with the use of a car (Coyle et al, 2006). By and large, the use of public modes of transport has increased.

In fact, ridership by public transport in the United States rose by 15 percent in 2007. For those in the taxi business, these have especially been hardest hit , and this has forced some of the operators to increase fares, only to have their customers walk away from them (ACTE, 2008). The airlines too, have not bee spared either, with a coupe of them such as Delta and American airlines recording massive annual losses in the range of $ 1 billion (KLEIN, 2008). With such a gloomy picture having been slapped on the American transport industry, is there any respite for the Americans in the near future For the last six years, the price of gasoline, crude oil and natural gas has significantly risen.

In 2000, a barrel of crude oil ranged from $ 25 and $ 30 per barrel. This was later to rise to a high of $ 75 per barrel six years later. Due to this, such petroleum products as jet fuel, gasoline and diesel fuel, and which are primarily dependent upon by the transportation industry in the United States, have risen sharply. In addition, the price of a gallon of unleaded gasoline almost doubled to $ 2.36 in 2006, up from $ 1.46 in 2000. The rate at which both India and China are developing, has led to a sharp demand for oil, and this has had a massive impact on the petroleum-based products such as gasoline (Hiare & Machemehl, 2007).

The reliance of the transport industry on fuel is in no doubt, and its usage keeps on increasing by the day. In 1973, the consumption of petroleum was pegged at 9.05mb/day, and this was later to rise to 13.9mb/day by the year 2005. In addition, there was a strong growth in petroleum consumption to 28.2 percent in 2005, up from 24.6 percent in 1973. Furthermore, the annual average vehicle per capita mileage has also immensely improved from 5,440 miles in 1970, to 10, 087 miles in 2005 (ACTE 2008).

AutomobilesFor the automobile makers, they too have not been spared by the rise in fuel cost, as customers are no longer shopping for cars. Both Ford and General Motors have witnessed a slump in sales in recent years, leading to a recording of major losses. As a result, the auto makers have had to institute changes (VOA news, 2008). According to Rich Wagoner, the chairman of General Motors, the company has no choice but to close down some of its factories, following in the footsteps of Ford motors, who proceeded by closing shop on the manufacturing factories for non-fuel efficient vehicles.

The General Motors boss views this as a proactive move, in a bid to ensure the survival and success of the company. This will mean that thousands of jobs will have to be cut down. There is also a shifting trend in the auto industry towards the manufacturing of

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