It's official: The price of oil is a problem. Even as the going rate for black gold set one record after another, finance chiefs seemed largely unconcerned. But when gasoline crested the $4-per-gallon mark this summer, fuel prices rose to the top of the list of finance executives' concerns for the first time, according to the most recent Duke University/CFO magazine Global Business Outlook Survey.
"We asked CFOs if they were taking steps to change their energy use when oil was $60 a gallon, and again when it was $80 a gallon. Back then, few firms were doing anything," says John Graham, finance professor at Duke's Fuqua School of Business and the director of the survey. Even a year ago, fuel-cost worries idled at just seventh on CFOs' list.
But when oil rose to $140 a barrel, finance executives elevated those concerns to the top spot on their worry list, where it joined consumer demand, which has ranked as the number-one concern since January. Sixty percent of CFOs say their companies have taken actions to address the rising cost of fuel, with nearly half raising prices in response. Many have also cut back on travel, adopted more-fuel-efficient shipping methods, and improved the management of their facilities.
R. Don Elsey, CFO at Emergent BioSolutions, a biotechnology company in Maryland, says his main concern about surging gas prices is the impact on employees' commuting expenses. Elsey would like to allow staffers to work from home one day a week. "I think it would really mean a lot to people, and would help us in terms of retention," he says. So far, the telecommuting idea has stalled due to resistance from some of Elsey's fellow executives, but if the end-of-summer drop in gas prices proves to be just a blip, CFOs will no doubt continue to look for creative solutions.