Stocks exposed to oil price named

Understandably, given the fact jet fuel prices are about $US160 a barrel, airlines sit atop the list.

The analyst claims that 28 per cent of costs at Virgin Blue and Qantas are exposed to rising oil prices, with the former at greater risk given its inferior fuel hedging strategy.

Transportation stocks and, most surprisingly, packaging companies are also at great risk of suffering cost blow-outs, the GSJBW report stated.

Ranked behind the two airlines were Asciano Group, which the analysts claimed has 15 per cent of costs exposed to oil-price fluctuations, and paper and packaging giant Amcor at 12 per cent.

Leading GSJBW analyst Chris Pidcock said he believed the risk to earnings will increase in 2009 as oil tracks higher.

He predicted many high-exposure companies would try to pass rising costs on to their consumers, an important move but fraught with danger.

"The key issue is the ability of companies to pass through the increase in costs," he said.

"While a number of these companies have pass-through contracts or have hedged their exposure ... we continue to expect that higher oil prices will have a negative impact on demand as these costs are passed through to the end user."

Other sectors the analysts claimed were heavily exposed to rising oil prices included building materials (Crane, GWA, James Hardie), beverages (Coca-Cola Amatil) and services (Spotless, Transpacific).

The research note did not include resource stocks due to the difficulty in accurately estimating the impact.

"(However) we expect the sector will be negatively impacted due to higher operating costs," it said.

Oil prices were down in Asia yesterday after China said it was raising domestic fuel prices and Saudi Arabia announced an output increase.

On the New York Mercantile Exchange overnight, the oil price slid $US4.75 to close at $US131.93.

Not all analysts have such a grim view of oil prices, with CommSec chief equities analyst Craig James claiming oil was more likely to settle at lower prices.

"We have the Singapore (oil) prices coming down, we have the Aussie dollar going up, so that does create the prospect of prices coming down," he said.

Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors, said: "We continue to see the oil price falling back to $US100 a barrel some time in the next six months, before the long-term rising trend resumes".