by Brendan M. Lynch | December 01, 2005

Americans are more concerned with the price and availability of hydrocarbon energy petroleum and natural gas   than at any time since the oil shocks of the 1970s. This summer’s unprecedented hike in the cost of oil and gasoline was driven higher by the destructive arrival of hurricanes Katrina and Rita in September, both of which damaged the country’s vital oil-producing infrastructure in the Gulf of Mexico.
    Throughout the U.S. economy, higher energy prices are driving up the cost of living and doing business. On Aug. 30, the price of crude oil reached an all-time high of $69.91 per barrel, according to the U.S. Energy Information Agency. For all of 2005, the average price per barrel of crude oil will be about $60, up from $20 per barrel in 2001. 
    Within the meetings industry, suppliers are feeling the pinch. “Our gas, laundry costs and other production expenses have gone up,” says Jeff Duglin of Oldsmar, Fla.-based Duglin Linen, providers of specialty linen and chair covers to event planners. “We’ve passed along a fuel surcharge to our customers. While they don’t like it, it’s a small percentage of our real costs.” 
    Such charges are becoming more familiar to meeting planners. “We have definitely encountered energy surcharges again,” says Kay Granath, CMP, director of meetings and conventions for the Association Management Center, based in Glenview, Ill. “As a homeowner who sees how expensive it’s becoming just to operate one household, I can only assume the fees are going to go up.”
    Like many of her peers, Deborah Krant, conference director for the  nonprofit National Center for Employee Ownership in Oakland, Calif., has yet to see fuel prices hurt attendance or meeting budgets. However, she adds, “I don’t know if that means we won’t see that in the future.” 
    Chances are, we will, says Gregg Talley, CAE, chairman of the board of the Professional Convention Management Association and president of Mt. Royal, N.J.-based Talley Management. “I think we’re just starting to see that energy costs are a danger going forward,” he says. “Surcharges, higher ticket prices and costs at the pump impact decisions about travel. And increases in energy costs will cause people to question attending meetings.” 
    Just how much might energy prices rise? Will the airlines survive? Are fuel surcharges here to stay? M&C went to the experts for insights and advice.

Transportation woes
The meetings industry is dependent on transportation suppliers to function. Airlines, shipping companies, motor coaches, vans, shuttles and limos move attendees and goods to planners’ events and are key to their success. 
    Among transporters, commercial airlines are perhaps the most sensitive to rising energy costs and 2005 was not a good year. Carriers have gone bankrupt, merged, reorganized, cut capacity and routes, and reconfigured pricing structures. Of the six legacy airlines, three are bankrupt, typically citing the cost of fuel as the root of their financial troubles.
    “Today’s jet fuel prices are crushing and could prove the knockout blow for some,” says John Heimlich, vice president and chief economist of the Air Transport Association, a trade group representing U.S. airlines. “Thanks to the high price of crude as well as a range of issues with refining capacity, product distribution and market speculation, jet fuel prices have soared. And keep in mind, unlike other modes of transport, airlines have no alternative to jet fuel.”