Rising oil prices hurt the economy but will inspire alternative fuel research

• Rising gas prices might convince Americans to stop buying SUVs, and give the clean energy sector a boost.
• Crude oil rose $1.61 to $55.60 per barrel in recent trading on the New York Mercantile Exchange.
• Goldman Sachs estimates the average oil price will be $135.12 per barrel by 2008, which would put U.S. retail gasoline prices at $4.30 per gallon, about double the national average of $2.15 reported this week by the U.S. Energy Information Administration.
• If at-the-pump prices top $4 per gallon, Americans might stop buying gas guzzling sport utility vehicles (SUVs) and instead seek fuel efficient alternatives, the Goldman Sachs report said.
• In the meantime, the market is seeing immediate effects as investors assess the impact of oil prices across all sectors, including technology.
• The price of oil actually has limited impact on IT technology, said Martin Reynolds, a Gartner fellow specializing in emerging technologies.
• When the low-value producers go out of business, that affects the overall economy, he said.
• Overall economic dampening is probably the biggest influence of oil prices on the high-tech industry.
• Higher costs of transportation for componentsâ¬"as well as increased prices for shipping materials, such as plastic wrapping, that are made from oil and gas feed stocks"could also squeeze manufacturers with slim profit markets.
• And oil price increases are tied to higher natural gas and electricity prices, too, Mr. Elliott said.
• Lighter-weight materials, more advanced engine-control systems, low-resistance tires "these things are going to trickle down from premium lines to the secondary market, and are going to become standard on fleet vehicles, Mr. Elliott said.
• But he noted hydrogen technology might actually be dampened by high natural gas prices, because natural gas is used to make hydrogen.