the September 2008 Issue in PDF Format - Trade Show Executive

T r e n d i n g & S p e n d i n g
The Economy Takes Three Steps
Forward but Has a Long Way to Go
Darlene Gudea,
VP/publisher & editor
Trade Show Executive’s
Trending & Spending Forecast
Fig. I: TSE Forecast of
Net Square Feet of Exhibit Space
1.8% October
2.0%
4th Quarter
2.2%
2008
Fig. II: TSE Forecast of Number
of Exhibiting Organizations
2.0% October
2.2%
4th Quarter
2.1%
2008
Fig. IlI: TSE Forecast of
Professional Attendance
3.1% October
2.0%
4th Quarter
0.3%
2008
Fig. lV: TSE Annual Forecast
of Revenue
4.2%
Frank Chow,
senior economist
Year Ending December 2008
By Darlene Gudea,
VP/publisher & editor
Carlsbad, CA - What a difference a
month can make. Crude oil prices have
fallen 24% since reaching a record level
of $147 per barrel on July 17th. In
response, gas prices dropped 8% during
the same period. In turn, food prices
are coming down due to the drop in
energy and transportation costs. “These
developments may slow down inflation,
which accelerated in recent months due to
the dramatic increases in energy prices,”
said Frank Chow, senior economist for
Trade Show Executive magazine.
Demand for Oil is Slowing Worldwide
In previous columns, we highlighted the
recent changes in consumer behavior
sparked by the unprecedented high energy
prices. “These changes are finally making
a serious dent in energy demand and
bringing down oil prices with it,” said
Chow.
How long can we expect energy
demand and oil prices to continue
falling? Some economists have said
that given the pullback in gas prices,
demand could come back if motorists
feel more comfortable with the cost of
filling their gas tanks, Chow pointed out.
However, the U.S. Energy Information
Administration (EIA) reported in August
that oil demand during the first half of
2008 fell by an average 800,000 barrels
per day (bpd) compared to 2007 – the
biggest volume decline in 26 years.
Moreover, the EIA predicts U.S. petrol
consumption in 2009 will be even lower
than 2008, which would mark a drop in
demand for three straight years.
Energy demand is deteriorating
not only in the U.S., but also in most
developed countries. Developing
countries such as China and India are still
quite robust, but slowing, according to
the International Energy Agency (IEA).
The IEA lowered its 2008 forecast for
oil demand from 30 developed countries
(mostly in Europe and North America),
to 48.6 million bpd, down 1.3 % from last
year. But it said demand from developing
countries would offset those declines.
OPEC, which produces about 40% of
the world’s oil, also revised its forecast for
global oil demand in 2008, from 1.20%
to 1.17%. However, the cartel held its
2009 forecast at 1.03%. Due to a major
slowdown in transportation and industrial
fuel consumption, growth in demand
from industrialized nations is expected
to decrease in 2009, making growth in
world oil demand the lowest since 2002.
The strengthening U.S. currency, which
reduces demand for dollar-priced oil, is
contributing to the decline in crude oil
prices.
Airlines Are Dramatically
Reducing Capacity
Even though it appears that oil prices
may moderate for another year, some
businesses have decided it cannot take
the risk. Airlines are making startling
reductions in capacity. According to
the Official Airline Guide (OAG), there
will be almost 60 million fewer tickets
available in the Fourth Quarter of this
year compared to last year. Routes will
be scrapped at 275 airports around the
world and 3,500 fewer planes will be
needed. The U.S. will be worst hit, with a
reduction of about 20 million seats, while
Europe loses just 5.5 million. Experts
predict further reductions are sure to
follow in 2009 as the industry adjusts to
the current economic downturn. Willie
Walsh, chief executive of British Airways,
said the ailing airline industry is facing its
worst-ever business environment and this
reduced availability is almost certain to
force up ticket prices.
12 September 2008 Trade Show Executive www.TradeShowExecutive.com