Factories Cite Rising Natural Gas Prices
-- July 1, 2003
Last week, we told you how natural gas prices are climbing. Now, a paralyzing oil-worker strike in Nigeria -- where workers are furious over the government's move to raise the prices of gasoline, kerosene and diesel by 50% -- is lighting a fire under oil prices. Rising energy prices -- from oil to natural gas -- add new pressure to U.S. consumers and businesses who are already struggling with a slumping economy.
And make no mistake -- rising energy prices could make the economy sputter and stall. Consumers are already facing an eight-year high in the unemployment rate and mounting debts. This is eating into consumer confidence. For example, construction spending on residential projects fell 0.9% in May. Clearly, consumers are starting to rein in their spending.
Plus, companies continue to watch their profit margins shrink as energy prices rise. In fact, many of those managers surveyed for the most recent Institute for Supply Management's manufacturing index said they were concerned about rising natural gas prices. With a slumping economy, companies are not able to pass on these higher energy costs. And that results in the vicious cycle of more layoffs and less consumer spending.
related article: Factories Stubbornly Stagnant In June