Moderating Energy Prices Expected to Continue According to AFP Survey of Finance Professionals

Rising energy costs have minor impact on most organization’s profitability

October 17, 2006 - Las Vegas, NV - Finance professionals do not expect energy prices to spike to previously record high levels according to a new survey of treasury and finance professionals conducted yesterday at the Association for Financial Professionals (AFP) Annual Conference. While 12 percent expect significant increases in the price of electricity, more than half (52%) only expect a "slight" increase over the next year. Similarly, 48 percent expect only a slight increase in oil prices in the next 12 months. Further, more than a third (35%) of respondents believe that petroleum prices will remain stable or even drop over the next year.

In the AFP survey, only 14 percent of organizations experienced a significant drop in profitability resulting from the volatility in energy costs. Further, 70 percent reported no impact on the demand for their goods or services as energy prices increased.

"With responsibilities ranging from strategic planning to managing the flow of trillions of dollars through financial markets each day, AFP members are in a position to monitor the direct impact that increased energy prices have had on their organizations," said Jim Kaitz, President and CEO of the Association for Financial Professionals. "The survey results show that recent energy price volatility has not had a major impact on business."

Only 22 percent of respondents indicated that their organization raised prices of their goods and services. Other strategies cited included:

• Risk management techniques, including hedging and options strategies (more than 20%)
• Greater use of energy efficient processes (18%)
• Reducing employee travel (16%)

"As the daily resource of finance professionals, AFP provides the knowledge and tools needed to address the on-going challenge posed by energy cost volatility," said Kaitz.

Finance professionals were more likely to individually have taken actions than had their employers to address the impact of rising energy costs. Personal actions include:

• Reduced discretionary driving (42%)
• Used less energy for home heating/cooling (39%)
• Saved less money to pay for increased energy costs (23%)
• Reduced discretionary non-energy purchases (21%)
• Cancelled or scaled back vacation (11%)
• Purchased a more fuel efficient vehicle (10%)

Leaders in the finance profession are meeting in Las Vegas this week at the AFP Annual Conference to discuss critical issues facing treasury and finance professionals. More than 150 educational sessions and workshops are being offered on the key issues and over 300 exhibitors and sponsors are showcasing the latest products, services and technologies for the treasury and finance profession. 735 finance professionals participated in the survey, which was conducted on October 16, 2006 at the AFP Annual Conference. A copy of the results can be obtained at: www.AFPonline.org/research.