Forecast: Transportation, Metals Hit Hard By $40-Plus Oil

By John S. McClenahen Global Insight, a Waltham, Mass.-based economic forecasting firm, believes that oil prices above $40 per barrel "are not sustainable" -- and should actually fall by 20% next year. But what if they don't? Manufacturers of light, medium and heavy trucks would suffer -- as would auto producers, says the firm's Tom Runiewicz. "Manufacturers of motor vehicles would see production change from 2% [growth] to a 6% decline next year," he says. Production of nonferrous metals, not including aluminum, would be flat in 2005, a sharp contrast to the 4.5% growth now expected. Aluminum, too, would be flat, in contrast to expected growth of about 4%. Among other sectors, "manufacturers of organic chemicals would encounter a 1% decline, versus the 3.1% growth now envisioned for 2005. [And] plastics and tires would also see positive gains reduced to nothing," he says.

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