Fuel Costs & the Transportation System

It was found that the effects of increases of significant proportions of fuel costs on transportation systems is a phenomenon with an historical precedent which is well within the memory range of most Americans, as the last experience with the phenomenon occurred only 11 years ago. It was found further that the indirect effects deriving from economic recession and financial markets uncertainty will likely prove to be more damaging to the passenger hauling segment of the air transportation industry than will the more direct effects deriving from rising operating costs, and the necessity to raise fares.

Based upon the findings of the research performed, it was concluded that rising fuel costs in 1990 will adversely affect transportation systems. Specificaly, it was concluded that the passenger hauling segment of the air transportation industry will likely experience a period of significant recessionary activity.

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INTRODUCTION ............................................. 1

EFFECTS OF RISING FUEL COSTS ON THE PASSENGER HAULING SEGMENT OF THE AIR TRANSPORTATION INDUSTRY .......

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mpact on the industry. The results of increases of significant proportion of fuel costs which exert the greatest negative effects on the passenger hauling segment of the air transportation industry are indirect in nature. Such fuel cost rises typically produce panic in the financial markets, and induce recession in the economy, especially in industrial economies.3 The combination of financial uncertainty and economic recession cause the level 3of usage of the passenger hauling segment of the air transportation industry to first level, and then contract in terms of revenue passenger miles.4 The effects on industry revenues and profitability of such leveling and contraction are typically both more severe, and longerterm than are the direct effects of rising fuel costs. Crude Oil Price Increases:19791980, and 19901991 In order to appreciate the magnitude of the crude oil price increases in 1990, it is desirable to compare them with those of the 19791980 time period. This comparison is illustrated in Figure 1, which may be found on the following page. As the data presented in Figure 1 indicate, crude oil price increases in 1990 have closely parallelled those of 1979. The effects of economic recession, and, in turn
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Some common words found in the essay are:
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Approximate Word count = 1688
Approximate Pages = 7 (250 words per page)

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