Effects of the Rising Oil Prices on the Transportation Industry

1403 Words6 Pages
The transportation industry relies on oil to keep its road, rail, maritime and air networks operating. As time goes on oil is becoming increasingly scarce resulting in price increases. This research essay will delve into the effects of rising oil prices will have on the transport industry along with solutions.

Oil is the main driving force behind the transportation industry as no other alternatives burn as cleanly, or are as safe to transport. Bio fuels have created a niche in the market but unfortunately there is no feasible way to harvest enough biofuel to meet the worldwide oil demand. When oil first became a commercial operation in the 1860’s there were two wells in America that produced a total of 6,500 barrels a day; at the time this was enough to accommodate for demand worldwide. In more recent times we are extracting around 70 million barrels of oil every day to keep up with demand (Tabak 2009). The rising cost of fuel generally comes from development in extraction technologies or recalculated estimates of remaining deposits within the reserves. The rate of discoveries of large oil and natural gas reserves has been on the decline for the past 40 years (Wilson & Burgh 2007).

Fuel is the highest operating expense faced within the transportation industry. Without smart planning companies may become unable to remain competitive or economically viable in the market due to the rising cost of fuel (Sowinski 2013). In the late 20th century additional costs would generally be pushed onto the customer but as competition has increased in the transportation market this would lead to the customers taking their business to cheaper firms that offer the same service. This is where the role of the transport manager comes into ...

... middle of paper ...

...s in Victoria’, BP, Viewed 20th March 2014

Motormouth 2014, ‘Fuel Prices And Petrol Prices Australia’, Motormouth Pty Ltd, Viewed 20th March 2014

Sayigh, A 2012, ‘Comprehensive Renewable Energy’, Elsevier Ltd., Amsterdam, The Netherlands, Viewed 20th March 2014, Science Direct database.

Nugaras, J, Radzeviciene, A 2012, ‘Networking in the transport sector: inter-firm vs intra-firm perspective’, Science – Future of Lithuania, Issue 2, Volume 2, pp. 69, Viewed 20th March 2014, Academic Onefile Database.

Australian Department of Resources, Energy and Tourism 2012, ‘FUEL FOR THOUGHT: Identifying potential energy savings in the Australian road and rail sectors’, Viewed 22nd March 2014
Open Document