We feel it most when pull into the fuel station for yet another wallet busting fill-up. But there are, of course, many other areas in which the volatile oil price is impacting on all our lives and our businesses. It has been generally accepted the world is unlikely to ever return to the era of cheap fuel as developing economies such as India, China and the thriving BRIC nations increase their take on the globe's energy resources. So what effects can already be seen as a result of fuel and energy prices and what more shocks are yet to come? Taken at face value, the answer is not a pleasant one, but as we will discover business is already adapting. What we find is that tough times force change, and while that change may appear harsh reality at first, it can benefit all in the long term. There has been a response to higher oil prices, and it has been a predictable and controversial one. Both the UK and US governments are looking to find more oil. In the States, President Bush's moves to lift the offshore drilling ban has riled the environmental lobby. But they appear in the minority. Just five years ago only 39 percent of Americans supported new drilling offshore. Now gas prices have trebled, a majority of the population, more concerned with their household budgets than environmental concerns, are in favour of finding as much new oil off American shores as possible. So too is Presidential hopeful John McCain. If Barack Obama wants to win in November he may well have to change his view and allow drilling and the promise of cheaper gas for the voters. Energy running costs Fuel costs are already impacting on vehicle fleet costs in both the UK and US, but one issue set to impact on businesses across UK in particular are the day-to-day running costs of energy in their own buildings. Pump prices for petrol and rising consumer energy bills have become the media's de-facto metric on the impact of energy price rises on UK consumers, but this has hidden a much more serious problem. While consumer rises of 20, 30 and, recently, even 35 percent in electricity and gas prices make good headlines, the true impact on businesses is yet to hit. Jon Davies, managing director, supplierswitch.com, has this take on the issue: "For businesses coming out of a one year fixed price deal the increases between now and the end of the year will be somewhere in the order of 130 percent. Those renegotiating two-year deals are in for an even greater price shock. And it doesn't stop there. Businesses with a distributed supply chain will be faced with the compound effect as each of their suppliers face similar energy price rises. Not only will the energy cost of business more than double, but freight and haulage costs, the prices of raw materials, and heating, lighting and manufacturing costs will also rise significantly." According to Davies, businesses need to take action to mitigate the financial and operational risks of increased costs across their supply chain. Research shows that a large majority of firms leave energy contract negotiation until the final weeks of their existing contract. With the latest round of contracts due for renewal due on October 1 time is already running out. Manufacturing Driven by soaring oil and food prices, the cost of raw materials has risen on average 28 percent. However, manufacturers have felt able to raise their prices by, on average, only nine percent. Now, not surprisingly, the UK's Office for National Statistics has reported a 0.8 percent decrease in output for the second quarter of 2008. Yet, it still seems that the industry is in a better shape to face the hardships this time around. In fact, the Financial Times recently reported that, "many manufacturers express confidence that they have equipped their businesses to withstand any downturn". So what is behind this new-found self-belief? Amina West of Autodesk Manufacturing has some answers: "First, it's the fact that many firms have made the decision to leave low-cost mass production to those areas of the world where labour is relatively cheap and to make good design and other quality issues their differentiator. "Second, perceptions of the industry as a lumbering, inefficient anachronism are totally outdated in themselves. Over the past decade, manufacturers have been quick to try out both new methods of working and the latest technologies, so that now the best-in-class are keen, lean and operate sleek, effective workflows." In the past, the best way to survive a dip in economic fortunes was to batten down the hatches and try and sit it out. Typically, every item of expenditure or overhead would be scrupulously examined and everything that's seen as "unnecessary" unceremoniously dumped. This is fine in one way, but not if it means creativity and ideas thrown out with the bathwater. However, according to West, the general opinion within the industry now is that the only way to live to tell the tale is to continue to think strategically and to invest in methods and tools to get to the most innovative and best designed products as quickly as possible to feed the capricious global market. This means protecting key assets such as the latest software to ensure a company can keep delivering. Retail Retailers, both in the UK and US, are being hit by a double whammy. As if the credit crunch wasn't bad enough for retail spending, fuel costs are proving an equally tough hurdle for retailers to overcome. Clay Olivier, chief operating officer at Volusion, the online ecommerce solution provider, said: "The National Retail Federation in the US is reporting that 40 percent of Americans say they are driving less due to high gas prices. With gas prices soaring globally consumers are turning to the web to save money. "With everything available, online shopping can provide better discounts and niche products that are not always available in store, at their finger tips without having to travel to retail locations. Savvy online retailers can really take advantage of this new demand even in the face of struggling economy." Irwin Kramer, founder and chief executive of iCongo, the US e-commerce group, agrees with Olivier. "Painful gas prices are hitting consumers' pocketbooks and impacting spending In addition to tried and true online strategies like free shipping, retailers need to focus more on customer service. Retailers must adapt to the changing economy by integrating technologies to better service customers. With fewer retail shoppers likely this holiday season, retailers must shift their strategies by offering smarter promotions, cross-channel capabilities and a more personalised experience." Logistics If the industry commentators are to be believed, life could become even more challenging for the logistics industry come 2009, especially in the automotive industry, as the seeds of economic recession start to bite into the pockets of corporates and private car buyers alike. In response to automotive customer's desire to reduce supply chain costs, DHL is increasingly seeking to introduce new logistical innovations into tried and tested areas of the manufacturing process. One such solution is the use of what DHL terms a `control tower' approach, whereby we act as a central logistical co-ordinator and planner, ensuring that total supply chain visibility is achieved. Paul Dyer, managing director of DHL Automotive UK, says: "This approach, also termed `fourth party logistics' or `lead logistics provider', establishes a powerful platform for all suppliers to collaborate, share facilities and enable a much more responsive, reliable supply chain." There's little doubt the volatile oil price is having its impact. But, as those quoted in this article show, there are opportunities for business despite the strains. The question is, are all business savvy enough to take them?