Oil prices will remain volatile in the foreseeable future, creating problems not only for the global economy but also for several industrial sectors that are heavily reliant on crude and refined products, particularly the airlines, chemicals, electrical utilities, and freight transportation, says Standard & Poor's Ratings Services in a published report entitled, "The World Of $80 Oil: How The Economy And Industries Cope."

Although fluctuations in energy costs have whipsawed specific sectors, the U.S. economy as a whole is less vulnerable to higher oil and gas prices.

Standard & Poor's credit analyst Andrew Watt and chief economist David Wyss noted that the price volatility evident in oil also extends to natural gas. "As the share of world energy use shifts away from oil, economies have overall been consuming more natural gas," said Mr. Wyss. In the U.S. alone, in the last 12 months the wellhead price of natural gas has varied by as much as 40%.

Energy is a key component for many companies, and their success or failure in managing changing energy prices can bear heavily on their financial profile and ratings. Higher crude oil prices have hurt airlines, as have the added refining costs to turn oil into jet fuel. Even though carriers were able to pass through higher fuel costs by raising fares in the domestic market during 2005 and 2006-and can still do so in many international markets - pricing flexibility has been squeezed.

Chemical companies are also especially susceptible to movements in the cost of energy. Natural gas and petroleum are major raw materials for chemical producers.