http://money.cnn.com/2011/04/08/news..._crisis/index.htm?cnn=yes&hpt=Sbin

Quote: "We're facing another fuel crisis, and crisis is not too strong of a word," said American Airlines CEO Gerard Arpey, speaking at a conference of business journalists in Dallas.

Lufthansa is investing in long-term biofuels development with their "PureSky" program. I think that they are hoping that biofuels, while not necessarly less expensive, will offer superior price stability to fossil fuels. As biofuel production increases and both advances in technology and economies of scale bring down prices, it will rapidly outcompete fossil fuel. This, to me, is so obvious I do wonder why US airlines haven't considered it.

Quoting DocLightning (Thread starter): This, to me, is so obvious I do wonder why US airlines haven't considered it.

CO has already test flown aircraft flown using bio fuel;

http://www.msnbc.msn.com/id/28547191/ns/us_news-environment/

Quoting DocLightning (Thread starter): As biofuel production increases and both advances in technology and economies of scale bring down prices, it will rapidly outcompete fossil fuel. This, to me, is so obvious I do wonder why US airlines haven't considered it.

I think "rapidly" is optimistic. I would comfortably estimate that biofuels will not significantly alter the economics of transportation fuels for another 25 years (if that). That is a long, long time; given that most businesses are looking for a return on capital in 5 years or less. An airline could perhaps operate an entire generation of aircraft types longer before approaching a decision regarding biofuels.

On the flip side, I think we have both the technical readiness and market conditions for gas-to-liquid conversion to become a relevant source of transportation fuel. We have more natural gas than we know what to do with in the United States and the byproduct of the Fischer-Tropsch reaction is closer to aviation kerosene than gasoline. Even better, it would not require a capital commitment on behalf of the airlines.

American's problems are so much greater than fuel alone, but fuel will indeed exacerbate them... but I digress...

Quoting DocLightning (Thread starter): As biofuel production increases and both advances in technology and economies of scale bring down prices, it will rapidly outcompete fossil fuel.

But how long will that take? 10 years? 20 years? ...

One thing that I think is different between European companies and US companies (public companies) is that European companies seem to be better at making long term decisions while the US companies are all about maximizing stock price for the short term... perhaps a reason why it "appears" that US airlines, in general, haven't considered biofuels.

[Edited 2011-04-10 18:32:34]

Quoting 0NEWAIR0 (Reply 3): But how long will that take? 10 years? 20 years? ..

If you don't the race, you never get to the finish line.

I agree 100% about the problems with paying more attention to quarterly reports than long range planning.

When EK starts using bio-fuels, that's when others should too. No, not because any fuel subsidy but because TC would definitely know the right timing.

I wouldn't call it a "fuel crisis", but more of a revenue management/pricing crisis... The airline industry will absolutely need to continue managing capacity responsibly and charge fares that are more in line with the costs required to operate an aircraft....

Quoting dfwrevolution (Reply 2): I think "rapidly" is optimistic.

Given the rate at which new technologies tend to emerge, I would predict with within 15 years after introduction, biodiesel would be on par with fossil fuel for costs. The initial drop in price would probably be the fastest, just as improvements in jet engines were fastest at the start of the technology. It took less than two decades to go from Comet 1 to 747-100. At first, simple tweaks and obvious solutions to problems are plentiful. It's not until the technology matured that we had to start resorting to "fancy tricks" to improve the technology using CFD and high-tech materials.

Once such an investment is made, the improvements will come rapidly.

Quoting 0NEWAIR0 (Reply 3): One thing that I think is different between European companies and US companies (public companies) is that European companies seem to be better at making long term decisions while the US companies are all about maximizing stock price for the short term... perhaps a reason why it "appears" that US airlines, in general, haven't considered biofuels.

This is a problem with the United States in general. We have no long-term vision, and that may well be the downfall of the country. We haven't planned ahead for eventualities such as $200+/bbl crude or reaching Peak Oil before we thought we would. Europe is preparing. Asia is preparing. We are not.

Quoting DocLightning (Thread starter): This, to me, is so obvious I do wonder why US airlines haven't considered it.

If airlines were experts in this area, they would quit with the airline business altogether and join the commodity trading business. They do not have a competence in energy. Generally speaking

In time, airlines will connect with leading fuel procurement / hedging consulting services. That's the best they can hope for.

Quoting FURUREFA (Reply 6): but more of a revenue management/pricing crisis..

...for American Airlines. It's kind of like GM in the credit crisis in 2008. Is it a crisis, sure... will it cause fundamentally unstable companies to collapse, sure it will.

Quoting 0NEWAIR0 (Reply 3): American's problems are so much greater than fuel alone, but fuel will indeed exacerbate them... but I digress...

It has a lot to do with the value of the dollar. Not saying I expect the dollar to fall further, but it could. As a result, by definition, the dollar price of oil rises. (not "more expensive oil" per se). Just something to think about.

Quoting Flighty (Reply 8): If airlines were experts in this area, they would quit with the airline business altogether and join the commodity trading business. They do not have a competence in energy. Generally speaking

No, because up until recently they didn't need to.

But they are responsible for 1-3% of global fossil fuel consumption and so they use a god-awful lot of the stuff. Some of them, like LH, are wising up and trying to become experts.

Quoting KFlyer (Reply 5): No, not because any fuel subsidy but because TC would definitely know the right timing.

Are you kidding me? TC is like a puppet on a string....

Biofuels will not have wide spread success until they discover ways to produce cellulosic ethanol (grass, wood) in large quantities. The shear volume of fuel needed to power the airlines will hold back the use of biofuels until a large infrastructure is in place. The production facilities to produce large amounts of biofuels simply do not exist, yet. It will be 20 years, at least, till there is wide spread use of biofuels in automobiles. Only after lengthy use will the FAA approve biofuel use in airliners.

Quoting fuelfool (Reply 11): The production facilities to produce large amounts of biofuels simply do not exist, yet. It will be 20 years, at least, till there is wide spread use of biofuels in automobiles.

Huh?? Have you been in Europe recently and seen how they sell E85 (85% ethanol) fuel at petrolstations?
I see Europe being far ahead of the rest of the world in this.
The problem is not the production facilities itself, but how to produce the biomass without damaging environment or cannibalise on resources needed for the food production.

Quoting STT757 (Reply 1): CO has already test flown aircraft flown using bio fuel

VS too:

http://news.bbc.co.uk/1/hi/7261214.stm

There is a finite amount of fuel that can be produced from corn starch, roughly 15 billion gallons a year. The U.S. consumes over 20 million barrels of oil a day. That is a huge gap. Ethanol produces less energy so you will need to decrease range or increase the size of a fuel tank. It does not matter in a car if your fuel economy decreases as much it does in an airplane.

I wouldn't talk about fuel crisis yet, but it's coming sooner or later, so any steps to prepare for it, in the long term, will pay off.

There are several small-scale initiatives by several airlines around the globe. The most recent one from IB for example:
http://atwonline.com/eco-aviation/ne...alue-chain-biofuel-initiative-0330

They're a good start, but we need more of that, and at larger scale. Then again, most of these initiatives are coming from private industry alone, without government help. If EU governments subsidized them with just one-tenth of the money being dedicated to solar panels, we would be much farther ahead in sustainable biofuel development today.

Quoting Asiaflyer (Reply 12): Have you been in Europe recently and seen how they sell E85 (85% ethanol) fuel at petrolstations? I see Europe being far ahead of the rest of the world in this. The problem is not the production facilities itself, but how to produce the biomass without damaging environment or cannibalise on resources needed for the food production.

Careful, your last sentence says it all. The ethanol we consume here is taking away the farmland from others. If the trend continues, eventually people [in poorer nations] will go hungry so that we Europeans can drive our cars. That is hardly a solution, but politicians & enviromentalists here refuse to see it.

But since the current 1st generation, unsustainable biofuels (corn starch, sugar cane, etc) are useless for aircraft use, the airline industry can make a big contribution by developing 2nd generation biofuels, which can be used on aircraft, and don't compete with food crops for land & water resources, apart from being much more energy-efficient over their life-cycle.

I can remember an article or a statement I read a couple of months ago about LHs biofuel long-term test (started this month), which states that if the oil price rises to the 2008 level, the use of biofuel would be economically.
Does somebody else remeber this article? I am not sure about the exact numbers and the official LH press release provides no informations on the cost effectiveness.

Quoting Asiaflyer (Reply 12): Huh?? Have you been in Europe recently and seen how they sell E85 (85% ethanol) fuel at petrolstations? I see Europe being far ahead of the rest of the world in this.

Actually, for E85, Brazil and the USA are probably the leaders. Europe have been using biodiesel (B100?) for a long time, since they have a high proportion of diesel cars, unlike the USA, but for E85, it's common at many pumps in parts of the USA. Even Saab, who I believe is a European leader for E85, is a GM owned company, who are the US leader with their 'flexfuel' technology.


Jimbo

Quoting FURUREFA (Reply 6): I wouldn't call it a "fuel crisis", but more of a revenue management/pricing crisis... The airline industry will absolutely need to continue managing capacity responsibly and charge fares that are more in line with the costs required to operate an aircraft....

This will be a neat trick to pull off while making sure demand doesn't collapse.

The 25% price increase we've all felt at the pumps in the last year puts a mean dent into our travel budgets.

Quoting DocLightning (Reply 7): Once such an investment is made, the improvements will come rapidly.

Realistically, the ones making such investments will most likely be the current players in the energy market, and they won't have any incentive for the price of biofuel to drop below that of fossil fuels.

Quoting bond007 (Reply 17): Even Saab, who I believe is a European leader for E85, is a GM owned company, who are the US leader with their 'flexfuel' technology.

The Wiki sez:

Quote: Saab Automobile was acquired by General Motors in 1990 who sold it to Spyker Cars in 2010.

So during the period of interest they were owned by GM, but not any longer.

Is this another reason for Ourpay to validate his $5.50/share stock and raising of ticket prices?   

Quoting DocLightning (Reply 9): Quoting Flighty (Reply 8): If airlines were experts in this area, they would quit with the airline business altogether and join the commodity trading business. They do not have a competence in energy. Generally speaking No, because up until recently they didn't need to. But they are responsible for 1-3% of global fossil fuel consumption and so they use a god-awful lot of the stuff. Some of them, like LH, are wising up and trying to become experts.

At UA they have said that we use approximately 1/365th of world oil consumption, or 1 days production for the whole world. There is obviously some rounding there, but you get the picture. Now roll up all the world's airlines...

[Edited 2011-04-11 06:17:42]

Quoting fxramper (Reply 19): Is this another reason for Ourpay to validate his $5.50/share stock and raising of ticket prices?

Im thinking he may be setting the stage for Chapter 11 or some major cuts.

Quoting fuelfool (Reply 14): There is a finite amount of fuel that can be produced from corn starch, roughly 15 billion gallons a year. The U.S. consumes over 20 million barrels of oil a day. That is a huge gap.

If your numbers are right, then there is a huge gap as long as your year has less than 750 days.

Quoting bond007 (Reply 17): Europe have been using biodiesel (B100?) for a long time, since they have a high proportion of diesel cars

Some people/villages make their own fuel (colza oil) but it's not really a biodiesel, as it only works in older simpler engines, not current turbocharged high pressure injection ones. There are regulatory problems, too, for example, should fuel taxes be paid ? Taxes are more than half the price of gasoline/diesel fuel, here, even 80% when oil is cheap.

At an industrialized level, what exists is an European directive forcing the use of at least 5% biofuel in all fuels (for cars, at least). So gasoline is now E5-E10 and same for diesel. There are indeed some pumps for E85 but for some reason almost no car sold is flex. People end up experimenting themselves with it, I would if I didn't drive so little.

About gas-to-liquid, you have to first look at where the gas comes from. Fracking has just been banned here, literally days ago, just before it should have started being used, because of environmental and safety concerns.

There is no fuel crisis there is a plenty of fuel on the market. The price is controled by the speculators and the mafia known as opec. We need to see 5-6 dollar gallon before we make permenant changes in the us on how we use fuel. More working from home, 4 10hr days, mail 4 days a week, fix the stop lights.

Quoting LAXdude1023 (Reply 21): Im thinking he may be setting the stage for Chapter 11 or some major cuts.

It's comical what AA has become. Love getting all the Fwd: joke email from different AA pilots. They think a lot of Ourpay.   

Quoting ripcordd (Reply 24): There is no fuel crisis there is a plenty of fuel on the market. The price is controled by the speculators and the mafia known as opec. We need to see 5-6 dollar gallon before we make permenant changes in the us on how we use fuel. More working from home, 4 10hr days, mail 4 days a week, fix the stop lights.

More reason why I think Arpey is setting the stage for something.

Quoting fxramper (Reply 25): It's comical what AA has become. Love getting all the Fwd: joke email from different AA pilots. They think a lot of Ourpay.

Some painful changes have to be made pure and simple. I dont believe for a moment that AA will cease to exist, but they need bold and inspiring leadership. Arpey is incapable of that. Arpey is a very smart man, but he a great leader he aint.

Quoting KFlyer (Reply 5): No, not because any fuel subsidy

What factual 'fuel subsidy' are you referring to (and I mean factual, not which is a.net fashionable)

Quoting Aesma (Reply 23): There are indeed some pumps for E85 but for some reason almost no car sold is flex.

Motorists buying cars are driven by the tax regime.
Here in Sweden E85 costs less per km to use than petrol. Also E85 cars are exempt from the Congestion tax in Stockholm. This led to huge numbers of E85 cars being bought. ( I've got one). Every car dealer sells E85 cars in Sweden.

But now the tax rules have changed. Sweden used to have very high tax on diesel cars, which has been reduced, and also the exemption for Stockholm congestion charge will soon be only cars with low (under 120) CO2 emissions.
So now, once all petrol stations sell it, E85 is going out of fashion and small diesel cars are in.

Quoting DocLightning (Thread starter): Lufthansa is investing in long-term biofuels development with their "PureSky" program.

Quoting dfwrevolution (Reply 2): I think "rapidly" is optimistic. I would comfortably estimate that biofuels will not significantly alter the economics of transportation fuels for another 25 years (if that).

There is a huge problem with alternate energy. Actually, there are two problems.
1) The price of alternate forms of energy tend to rise with the price of oil. I'm not sure I understand why, but ethanol is a great example. I guess demand for ethanol increases when oil goes up and since ethanol is such a small source of energy relative to oil, it doesn't take much of a change in oil price to drive the need for ethanol significantly higher. OR you could call it a conspiracy.
2) The problem specific to the airlines is that if they invest a lot of money in alternate fuels and the price of oil dives, they will get whipsawed by the competition who didn't waste their money. It's a very thorny situation. Worst case would actually be buying planes that only use alternate energy. Those would be the most efficient, but imagine paying $3.35/gallon for biofuel if oil dives to $2. Those $100 million planes would be parked.

Quoting KFlyer (Reply 5): No, not because any fuel subsidy but because TC would definitely know the right timing.

Quoting AirNZ (Reply 28): What factual 'fuel subsidy' are you referring to (and I mean factual, not which is a.net fashionable)

All fuel in DXB is subsidized, not specifically EK. Have you seen how cheap it is there?
OTOH, ethanol is more heavily subsidized than that.

We may see a reduction in Regional Jet fleets if oil continues to increase as much as it has in the past weeks.

Quoting enilria (Reply 30): The price of alternate forms of energy tend to rise with the price of oil. I'm not sure I understand why,

That is fairly easy as long as you mean costs and not price:
1. Cost assumptions do not include escalation for fuel related factors. This explains why when oil is $20 a barrel, Alternative A is going to be economic at $35, but when oil IS at $35 the barrier has magically risen to $50 a barrel.
2. Cost assumptions are for processes with limited engineering history, so the difference between bench scale tests and even pilot scale usually brings horrible surprises.
3. Even if all of those work out, the costs mean that only well capitalized companies - such as oil companies - can afford a plant of significant size. And when the return on capital comes back to head office, someone eventually bells the cat by pointing out that their last exploration program had a return at a multiple of that, and their last exploration program had an effective tax rate of 85% in the host country!!! (Real example, ExxonM are developing the Cepu oilfield but as far as I know are not developing their excellent synfuels project.)

Quoting enilria (Reply 30): The problem specific to the airlines is that if they invest a lot of money in alternate fuels and the price of oil dives, they will get whipsawed by the competition who didn't waste their money. It's a very thorny situation.

And that is true also for oil companies that might feel tempted to invest in alternative fuels.

So the main organization that succeeds with synfuels is one that was started for political reasons. And it is probably making a per barrel profit similar or better than that for the Canadian tar sands. And it uses a process developed a long time ago to cope with a blockade during a war.

Ed managed to miss out barrel, but it IS late at night.

[Edited 2011-04-11 08:51:50]

Quoting DocLightning (Thread starter): will offer superior price stability to fossil fuels.

Have you seen what the price of corn and soy have done in the past few months. You are sheltered somewhat from precipitous price increases, but not immune. The company I worked for used to make biodiesel and lots of it, but after the run up in soy, we got out.

Why order just two 773s? Why did AA and the gurus not see this coming with the economy back when the banks failed and dump the entire MD80 fleet for fuel efficient 737s? I got an email forward of a letter sent to Arpey asking all these questions from every work group at AMR. Disgusting to see the management continue to make decisions based on what they saw on CNBC yesterday.

Quoting LAXdude1023 (Reply 27): Some painful changes have to be made pure and simple. I dont believe for a moment that AA will cease to exist, but they need bold and inspiring leadership. Arpey is incapable of that. Arpey is a very smart man, but he a great leader he aint.

He's got a UT MBA so he's not stupid. I've met him a few times, but he's no Bob Crandall.

Quoting fxramper (Reply 34): Why order just two 773s? Why did AA and the gurus not see this coming with the economy back when the banks failed and dump the entire MD80 fleet for fuel efficient 737s? I got an email forward of a letter sent to Arpey asking all these questions from every work group at AMR. Disgusting to see the management continue to make decisions based on what they saw on CNBC yesterday.

How do you dump 250+ planes and instantly swap them for 737's and maintain a schedule like AA's? It takes time and is called a phase out, which clearly is occuring, and even happening on an expedited schedule. How would you have done it? I would ask myself these questions, before you bad mouth an airline that has stood it's own for many many years without taking the easy way out.

If you dont' like Arpey, thats cool, but Arpey is NOT AA-there are another 60,000+ employees who's face is that of American. I would be hesitant to mention Crandell. Crandell ordered all of those MD80's many moons ago (aside from the TWA acquired ones) and micromanaged the company (ever work for one of them??), and put his foot in his mouth more times than not.

This is a fuel crisis...and a ridiculous one at that.

Bio-Fuels as we understand them are hardly the answer today.

There is a myraid of technical, logistical and most important financial issues that must be worked out before such fuels if ever become mainstay products in aviation.

The business case for them even with $100+/bbl fuel are marginal. One of the biggest hurdles to overcome is the very long gestation period for such products which would only be sustainable if there was no fear of fuel prices ever falling again. The minute crude becomes cheaper, investors and ultimately the users of alternate fuels would be taking losses.

Quoting FURUREFA (Reply 6): I wouldn't call it a "fuel crisis", but more of a revenue management/pricing crisis... The airline industry will absolutely need to continue managing capacity responsibly and charge fares that are more in line with the costs required to operate an aircraft....

True, there is a revenue problem, however as we have seen the market(consumers) are not very flexible in absorbing increases without demand drop off.
Sadly the industry has minimal pricing power for its products on a consistent basis, which makes it more practical to try to tackle the cost side of the ledger instead.

Quoting LAXdude1023 (Reply 26): I think Arpey is setting the stage for something.

Yeah, a very poor Q1 earnings report and 2011 forecast.

Quoting enilria (Reply 30): All fuel in DXB is subsidized, not specifically EK. Have you seen how cheap it is there?

Lack of taxes. That is not a subsidy. Just because industrial nations find it very convenient to use pump taxes does not mean someone else is subsidizing the product when they don't charge fees.

Quoting ordjoe (Reply 33): Have you seen what the price of corn and soy have done in the past few months. You are sheltered somewhat from precipitous price increases, but not immune.

Indeed. Just last week, US corn prices set a new record after US Agriculture Department came out with its inventory warning that free supplies are at the lowest rate in 15-years.

Using foodstuff is a double edge sword and simply drives up the cost of the raw material which effects the price of the end product in addition to having its negative global effects on food prices.



One interesting alternate fuel form which David Neeleman of Jetblue is advocating is oil-shale. With the US siting on huge coal reserves and if crude prices remain high, this could be an easy technology (already known and established) that could turn out large volumes of fuel at lower risk and cost versus the more risky exotic bio-fuel concepts.
Sadly its politics which is preventing this from happening today.

Quoting BOAC911 (Reply 31): We may see a reduction in Regional Jet fleets if oil continues to increase as much as it has in the past weeks.

It's already happening. The real question is whether it will kill the 70 seater market which has been untouched as yet.

Quoting Baroque (Reply 32): Quoting enilria (Reply 30): The price of alternate forms of energy tend to rise with the price of oil. I'm not sure I understand why, That is fairly easy as long as you mean costs and not price: 1. Cost assumptions do not include escalation for fuel related factors. This explains why when oil is $20 a barrel, Alternative A is going to be economic at $35, but when oil IS at $35 the barrier has magically risen to $50 a barrel.

I'm not sure I understand that, but my point was that the "street" price of alternate energy (such as ethanol) tends to rise in sync with oil which does nothing to mitigate rising oil prices.

Quoting LAXintl (Reply 36): Quoting enilria (Reply 30): All fuel in DXB is subsidized, not specifically EK. Have you seen how cheap it is there? Lack of taxes. That is not a subsidy. Just because industrial nations find it very convenient to use pump taxes does not mean someone else is subsidizing the product when they don't charge fees.

Perhaps if you couple that with the lack of transportation cost it is possible, but it seems to me that the Dubai pump price is less than the U.S. price minus our posted taxes.

Quoting LAXintl (Reply 36): Indeed. Just last week, US corn prices set a new record after US Agriculture Department came out with its inventory warning that free supplies are at the lowest rate in 15-years. Using foodstuff is a double edge sword and simply drives up the cost of the raw material which effects the price of the end product in addition to having its negative global effects on food prices.

I agree that using food as fuel is short-sighted and contributes to global hunger. It also causes us to over-harvest land for very bad reasons.

Quoting ordjoe (Reply 33): Have you seen what the price of corn and soy have done in the past few months.

*facepalm* Do some research about biofuels before you say things like that. But since you didn't, let me do it for you.

Neither soy nor corn are valid biofuels. I hate it when people knock biofuels because corn is a crappy one. I'm irritated at you because this information is so easily accessible (wikipedia) that it's just sheer laziness when someone goes off on this line of reasoning.

Corn is a biofuel only because of political issues. Valid biofuels like jatropha and vertical photobioreactor-grown algae do not have these sorts of issues.

Anyone suggesting using food as a biofuel needs to be strung up by the genitals.

Quoting LAXdude1023 (Reply 21):

Well, right now at the training center they are wrapping up new hire 7 week classes for 30 Chinese Mandarin speakers and beginning today there will be a class of 60 recalls that have been off about 8 years. There are three classes in April and three in May so if, indeed, there are cutbacks coming, i would hope the TWA people would not be subjected to a 3rd furlough. Perhaps enough people have retired to make them safe. If i were one of them it would be "once burned, twice shy, twice burned, BYE BYE!" Yet the pay they'll be getting would probably exceed anything they've been doing while off. I wish them nothing but the best!

Quoting LAXdude1023 (Reply 27): Arpey is a very smart man, but he a great leader he aint.

In the airline world, Arpey is certainly one of the more controversial executives. Just about everyone I know connected to this business has an opinion about him, even people that know little about American or its corporate culture...
And his(and the board's) decisions, for example, on American's fuel hedges are interesting to analyze...

What makes a great leader(airline speaking), anyways? Does running a successful organization automatically make someone a great leader? I ask, because it seems the assumption is that balance sheets determine leadership perception.
Of course, this is a (mostly) worldwide capitalist system, and the point is to make money, so I don't blame people for making that somewhat simplistic assumption...

Most historians, for example, cite Robert E. Lee as a great leader(or at very least a tactical genius). His command ( the army of Northern Virgina) and his government were defeated. Does that mean that the Union had better generals?

For me, leadership is a quality that's often talked about but rarely understood, or even fleshed out in a meaningful way.
I suppose how Arpey and others handle the cost of fuel will interesting topics to discuss...

[Edited 2011-04-11 12:07:29]

Quoting srqmuc (Reply 16): I can remember an article or a statement I read a couple of months ago about LHs biofuel long-term test (started this month), which states that if the oil price rises to the 2008 level, the use of biofuel would be economically.

I believe that, and there's not just the issue of price, but price stability. If I can produce 2nd generation biofuels at 140$ per barrel consistently, or buy unpredictable and highly volatile traditional fuel at 100-150$ barrel, which one do I choose? Fuel is one third of an airline's costs. Do you prefer to have that third being expensive, but under control, or do you want buy fuel at randomly jumping and sinking prices, which is the aviation equivalent of gambling at the casino?

You can build a business plan around 140$ barrel. You can't build a business plan with one third of your costs being highly volatile and out of control.

Quoting DocLightning (Reply 38): Anyone suggesting using food as a biofuel needs to be strung up by the genitals.

That would include the vast majority of Europe's politicians, and a considerable amount of enviromentalists. Not that I would mind.

For all the others, you can inform yourself a bit here:
http://www.enviro.aero/Not-all-biofuels-are-created-equal.aspx

Yet another interesting presentation:
http://www.iata.org/pressroom/facts_...ents/biofuels-gmd-presentation.pdf

Quoting fuelfool (Reply 11): Only after lengthy use will the FAA approve biofuel use in airliners.

Actually, as early as this year. And ASTM is the one to watch here, not so much the FAA. From the presentation above:

Until recently only fuels derived from fossil sources were specifically included in ASTM D1655.
ASTM International has developed a new specification, ASTM D7566 (“Standard Specification for Aviation Turbine Fuel Containing Synthesized Hydrocarbons”), in which biofuels produced to this standard using the Fischer-Tropsch process and blended to a maximum of 50% with conventional jet fuel are considered functionally equivalent to conventional jet fuel. Therefore, biofuel meeting this specification can be used by aircraft operators without fear of losing their AOC.
In late 2010/early 2011 a new type of aviation biofuel produced by hydroprocessing (treating with hydrogen) plant oils will be approved by ASTM International and will be included in the ASTM D7566 specification. This new fuel is commonly called hydroprocessed renewable jet fuel, or just HRJ.
The main result of the certification of aviation biofuels such as FT and HRJ is that airlines can substitute these fuels for conventional jet fuel up to 50% (the limit specified in ASTM D7566)

LH was ready to start using a biofuel blend on scheduled commercial flights HAM-FRA this month; a shipment from Finnland's Neste oils was ready to be delivered here to Hamburg harbor. Alas, ASTM has delayed their approval decision.

http://www.flightglobal.com/articles...ts-postponed-by-certification.html

Quoting LAXintl (Reply 36): One of the biggest hurdles to overcome is the very long gestation period for such products which would only be sustainable if there was no fear of fuel prices ever falling again. The minute crude becomes cheaper, investors and ultimately the users of alternate fuels would be taking losses.

Indeed. And governments could help here by providing secure financial backing to these products, and signing mid-term deals to buy a part of the production at guaranteed prices (for the military, for example), but they prefer to raise green taxes instead.

Quoting DocLightning (Reply 7): This is a problem with the United States in general. We have no long-term vision, and that may well be the downfall of the country. We haven't planned ahead for eventualities such as $200+/bbl crude or reaching Peak Oil before we thought we would. Europe is preparing. Asia is preparing. We are not.

No long term vision? Are you talking about just in the aviation sector? Or in general?

I'd say that's a pretty general statement, and a ill-conceived opinion at that.

You are saying the country from whence came the following sampling of technologies, products, and concepts (heavily skewed to aviation) both past and present:

Space Shuttle
Jumbo Jet
Internet
Personal Computer
iPhone
Google
Frequent Flyer programs
Low cost airlines

etc etc...

You are telling me it has no long term vision? You must be joking.

On this specific topic, we are doing a helluva lot of future energy research, both at the basic research level and at the commercial level.

Don't get me wrong. I agree that we are not as prepared as we need to be for our future energy needs. However, I think the reason our system works is that we do things that are economically feasible, and usually get the timing right. We leave the other stuff to the government to fund until there is a profit motive.

-IR

[Edited 2011-04-11 13:45:23]

[Edited 2011-04-11 13:54:10]

Quoting irelayer (Reply 43): On this specific topic, we are doing a helluva lot of future energy research, both at the basic research level and at the commercial level.

Not to mention other industries like Healthcare where the large majority of innovation occurs in the US.

First, if AA puts a 20% mix of biofuels into it's MD80s, it will use somewhere near the same amount of regular fuel because the MD80s are so inefficient. And, the biofuel won't cost less than normal jet fuel.
Isn't there a statement that poor planning doesn't mean someone else has to be in emergency mode?

Why do I get the feeling that biofuel won't be much different than desalination to augment fresh water supplies or the use of corn to make ethanol? Ethanol takes a food crop, (driving food prices up), then distills it into ethanol using more energy in the process than the energy of the end product. Desalination is much higher cost than other supplies and uses fuel to squeeze the salt out of seawater.

The question with biofuels is whether they can produce enough and at what cost. Also, will it take lots of energy to produce and what will be the cost of the final product?

I'm all for it, but not if it goes down the road of Ethanol or leads to a farm or other lobby that the politicians can't refuse.

In any case, Arpey's poor planning at AA has left them most exposed to higher fuel price to a point where they might just have to park some or all of those remaining MD80s.

Quoting irelayer (Reply 43): You are telling me it has no long term vision? You must be joking.

I believe the tendency of U.S.-based corporations to over-emphasize short-term quarterly earnings or short term results is what is meant.

Quoting irelayer (Reply 43): You are saying the country from whence came the following sampling of technologies, products, and concepts (heavily skewed to aviation) both past and present: Space Shuttle Jumbo Jet Internet Personal Computer iPhone Google Frequent Flyer programs Low cost airlines

To be fair, all but Google, and iPhone are products of the 1990's. And while new ways of brokering information are crucial to the future, without energy none of that moves. I see the USA doing very little to solve the fundamental problem, which is where we will get our energy from without drowning in our own waste.

Quoting DocLightning (Reply 47): To be fair, all but Google, and iPhone are products of the 1990's. And while new ways of brokering information are crucial to the future, without energy none of that moves. I see the USA doing very little to solve the fundamental problem, which is where we will get our energy from without drowning in our own waste.

To be fair I could list a lot more things that prove we have long term vision. I guess it depends on what you mean by "we". If it means The United States as a collection of people, government, corporations and so on, acting as a single entity relative to the rest of the world, then I have to disagree with your statement. I am looking at results, and results say (while we might not think long term) we have some impressive long term results under our belts. If we are opting for a narrower definition of "we" as in United States (Corporations) are typically lacking in long term vision, then I'd still disagree with you, albeit a little less so.

There are many things I can point to that encapsulate just how much long term vision US Corporations have. In terms of energy though, I don't think Asia or Europe are particularly good examples of "world leaders" in mapping out energy policy. China is attempting to power, feed, and move around 1.5 billion people with newly built coal plants and the same airliners we have! Japan has nuclear power plants that cost a fortune. The Europeans drive less, use more fuel efficient cars, and use more public transportation but their needs are different. It helps to look at what drives innovation in the first place. Need. Unfortunately every time there appears to be a pressing NEED for alternative energy sources (when oil tops a certain amount per barrel) everyone gets all excited because these things finally make sense, and then oil calms down and gets cut in half and people forget about it (until the next oil shock) because HUMANS are all about short term need over long term results. That said, I don't think its particularly a US problem. Nor is it fair to say that our nation is more or less forward thinking relative to other places.

-IR

[Edited 2011-04-11 16:38:35]

Clearly the airlines around the world are fearful as to the rise and likely staying high, oil prices, it economic effects that will take away money for air travel, companies cutting back on air travel to hold down costs and the need to have significantly higher fares.

As to the development of biofuels, one issue is this - as with ethanol, the energy needed (coal, oil in most cases) to process to create them is not good, taking much more energy than gained, as well as costs. Biofuels may not be able to transport in bulk in long distance pipelines (as with ethanol). Until the energy created is a net gain or only a minor loss, then it won't be viable.

Quoting aajfksjubklyn (Reply 35): How do you dump 250+ planes and instantly swap them for 737's and maintain a schedule like AA's? It takes time and is called a phase out, which clearly is occuring, and even happening on an expedited schedule. How would you have done it? I would ask myself these questions, before you bad mouth an airline that has stood it's own for many many years without taking the easy way out.

What he said.

As has been stated time and again. There really is no "fuel crisis", actually the U.S. currently has a glut of all types of fuel (gasoline, crude, ethanol, heating oil etc....) the crisis is allowing speculators with very little skin in the game to manipulate the price of such an important commodity. The law of supply and demand went out the window around 1999-2001 when former U.S. Senator Phil Gramm helped bring forth laws that allowed the risky derivatives/credit swap pyramid scheme that we are still feeling the affects of today.

A 2006 U.S. Senate report concluded that perhaps 60% of the price of oil is due to pure speculation. That's why i'm not sold on this whole biofuels revolution. There's nothing from preventing speculators and big banks (namely Goldman Sachs) from coming and artificially raising the price to fit their agenda much like they do with every other commodity, be it food or fuel.

Quoting lucky777 (Reply 51): As has been stated time and again. There really is no "fuel crisis", actually the U.S. currently has a glut of all types of fuel (gasoline, crude, ethanol, heating oil etc....) the crisis is allowing speculators with very little skin in the game to manipulate the price of such an important commodity. The law of supply and demand went out the window around 1999-2001 when former U.S. Senator Phil Gramm helped bring forth laws that allowed the risky derivatives/credit swap pyramid scheme that we are still feeling the affects of today. A 2006 U.S. Senate report concluded that perhaps 60% of the price of oil is due to pure speculation. That's why i'm not sold on this whole biofuels revolution. There's nothing from preventing speculators and big banks (namely Goldman Sachs) from coming and artificially raising the price to fit their agenda much like they do with every other commodity, be it food or fuel.

I do agree with this, however there were (sometimes HUGE) oil shocks wayyyy before there was large scale market manipulation through fancy securities. So the laws of supply and demand do indeed still play a part.

-IR

Quoting lucky777 (Reply 51): There really is no "fuel crisis", actually the U.S. currently has a glut of all types of fuel (gasoline, crude, ethanol, heating oil etc....) the crisis is allowing speculators with very little skin in the game to manipulate the price of such an important commodity.

This more than a speculative bubble.
Wealth in for example India and China is increasing rapidly, meaning more people can afford cars, motorcycles, refrigerator, TV etc. Those countries has seen a strong surge in demand for energy, bringing the previous balance of supply and demand for oil from around Usd 15-30 per barrel to a new level of 70-100 Usd.
Don't expect this to go much lower over coming years, unless demand will drop due to a new recession.
Then top this up with political unrest in some oil producing countries and chicken race by some some companies by all of a sudden hedge their fuel demand, and you see spikes well above 100 Usd/barrel.   

Quoting Revelation (Reply 18): The Wiki sez: Quote: Saab Automobile was acquired by General Motors in 1990 who sold it to Spyker Cars in 2010. So during the period of interest they were owned by GM, but not any longer.

So for the past 10 years, they've been owned by GM ...my point.
AFAIK they weren't making biofuel cars until 2006.

jimbo

Quoting Asiaflyer (Reply 53): Wealth in for example India and China is increasing rapidly, meaning more people can afford cars, motorcycles, refrigerator, TV etc

The 2006 U.S. Senate report showing that 60% of the price of a barrel of WTI crude being driven by speculation is indisputable. That isn't to say the wealth effect largely in China and India isn't adding to the overall cost of crude, surely it is. But when over 60% of the money being poured into crude is from large investment houses who have no intention of ever taking physical delivery of the product.

Margin requirements for all commodities, especially crude, should be raised dramatically. While ordinary retail investors put up 50 percent to buy a stock, for instance, a speculator has only to put down $6 to buy $100 worth of oil futures.

Under current requirements, speculators can distort the value of oil when they trade in the so-called futures market. They buy futures and bet on a higher price of oil, and then turn around and sell it well above its actual worth because the demand is artificially inflated – much like the practice that contributed to America’s housing bubble. Experts have said the traditional rules of supply and demand have gone out the window in the oil market.

I've said it before and i say it now.....there is no "fuel crisis"

Quoting Burkhard (Reply 22): If your numbers are right, then there is a huge gap as long as your year has less than 750 days.

A barrel is 42 gallons. So at 20 million barrels a day, that is 306 billion gallons a year, by the U.S., alone. Pretty big gap, if world max production of ethanol is 16 billion gallons a year. Not sure if there are any plans to change from 365 days per year.

[Edited 2011-04-11 20:34:38]

Quoting r2rho (Reply 41): That would include the vast majority of Europe's politicians, and a considerable amount of enviromentalists. Not that I would mind.

http://www.greenpeace.org/internatio...limate-change/solutions/bioenergy/:

Quote: (May 21, 2007) In particular, second generation biofuels can make a significant contribution to reducing GHG from transport in a sustainable way and we encourage research and development into second generation biofuels. In order to sustain greenhouse gas reductions, biofuel production must not contribute to the destruction of natural forests or other natural ecosystems, or to social conflicts including food security and biofuel crops must be grown in a sustainable way.

Sounds like there is a "considerable amount" of straw-manning going on in your comment.

Quoting lucky777 (Reply 51): A 2006 U.S. Senate report concluded that perhaps 60% of the price of oil is due to pure speculation. That's why i'm not sold on this whole biofuels revolution.

There is the inconvenient and absolutely incontrovertible fact that the amount of fossil fuels on Earth is finite and limited. Even if the whole planet were made of crude oil straight down to the core, there would be a finite amount of it.

Whether it happens next year or in two centuries, we are going to hit peak oil production and from then on, supplies will get lower and lower and lower and more and more expensive.

Now, we are going to solve this problem. But we can solve it in a panic when the time comes, or we can be prepared.

Europe and its corporations are preparing. I submit that the U.S. and its corporations are not. I need to give one example: "Drill, baby, drill."

Name one major EU politician who has made such a statement.

Quoting lucky777 (Reply 55): price of a barrel of WTI crude being driven by speculation

If restrictions were put on oil speculation, or if the U.S. government put a cap on price per barrel, the current global economic downturn would be a small tremor compared to the destruction that would occur to the global economy.

Quoting enilria (Reply 37): It's already happening. The real question is whether it will kill the 70 seater market which has been untouched as yet.

Yes that is going to happen, it is happening in other countries already. Virginblue, for examle here are dumping the E-170 in favour of using the larger E jets with less frequencieas, and turboprops. but it wont stop there. The US model, built on frequency, depending on much much cheaper oil to work. That is a thing of the past, even with new alternative fuels comming online.

These American 77W's we are seeing are just the begging. The US carriers will have no choice but to consolidate flights into larger aircraft. For Delta, and United, this should now not represent a problem. There is no need, for example, to run 4 flights to LHR from (for the purposes of example only) 3 different hubs say all with 767 equipment. (say totaly of 12 flights) They could for example, operate 2 flights with 747 equipment at each, departure times to enable a similar amount of arrivals times for the connecting passenger as the original schedule. They could also upgarde the largest O and D hub to VLA aircraft and funning more connecting pax through there, dumping some of the other flights entirely (a good example would be CO's EWR flights... upgage the 757s and connect less PAX in IAD and ORD)

People ulimately want frequuency... but they wont be willing to pay for it if it costs double. They will adjust. It's less important at the long haul end than the short haul... and in short haul markets we are already seeing it done with the 50 seaters. Delta are upgrading those 744s for a reason. They're still significantly cheaper CASM than the 763.

I don't dispute that recent increases in fuel prices are forcing tough decisions in management meetings in addition to causing many sleepless nights for US airline executives. However, I wonder if this so-called fuel crisis is unique to AA?

Do you think Southwest's CEO would use that term? How about foreign carries with revenues in Euros but fuel purchases in dollars? Probably not too bad for them since roughly $15 of the increase in a barrel of oil can be attributed to the depreciation of the dollar.

Additionally, IMO, airlines have passed higher oil prices onto customers this time around. I routinely see travel cost for my staff and have observed huge fare increases (30% to 50% +) on most long-haul flights, particularly US domestic trans-con. YTD, as of 3/31, we were running at 142% of projected travel costs even after cutting many non-essential trips which were included in the budget.

So... when 1/3 of your costs increases 50% that's a 16.5% overall cost increase but yet average fares seem to be up more than that amount (anyone have data on industry wide fare increases?), dare I say that many carriers could be doing okay?

Quoting genybustrvlr (Reply 61): So... when 1/3 of your costs increases 50% that's a 16.5% overall cost increase but yet average fares seem to be up more than that amount (anyone have data on industry wide fare increases?), dare I say that many carriers could be doing okay?

Oil is only part of the problem its about changing the business model. The problem bringing this about is it requires a reduction in frequencies, but NOBODY wants to be the first one to do it because it entices passengers to change carriers...but everybody really needs to do it to get their unit costs down. So we're seeing it done in increments...but it needs to be done in more than that. The mergers will of course help, by splitting departure times between different hubs, and removing more of the ruthless competition. But business class airfares aren't gonna be enough to play the old game of subsidising economy and winning bigger contracts through the ability to offer more frequencies, with economy passangers basically just 'ballast' to help cover the costs of offering those frequcies. That model wasn't sustainable. It worked with cheap engergy. That is a thing of the past. It's not just oil prices causing this. It's the entire business model.

Quoting fuelfool (Reply 59): If restrictions were put on oil speculation, or if the U.S. government put a cap on price per barrel, the current global economic downturn would be a small tremor compared to the destruction that would occur to the global economy.

May I ask you background/experience in economics and financial markets?

1) Oil is a global commodity. The U.S. Government has no power to cap the price. All it could do is subsidize the price to create an artificial cap - which is an absolutely terrible idea for too many reasons to possibly list here.

2) Oil prices did not cause or influence the global downturn. Poor risk management and sloppy loan origination were the primary causes. When over extended US homeowners could no longer extract cash from their homes, the effects rippled through the broader economy by means of deceased consumer spending, layoffs, foreclosures, property devaluation, blah blah blah, rinse and repeat until government bailout and stabilization of banks.

3) Speculation is not the problem. Oil, like all commodities, results in physical delivery at contract expiration. Therefore, a price bubble cannot sustain itself for nearly as long other asset bubbles, such as housing and equities, because the contract owner must take physical possession of the oil or sell the contract (at any price the buyer is willing to pay). If there was a bubble (i.e. more supply than end user demand) the price would fall rapidly because hedge funds and other speculators have neither the facilities to take physical delivery of oil nor the appetite to pay someone else to store it.

Quoting lucky777 (Reply 55): The 2006 U.S. Senate report showing that 60% of the price of a barrel of WTI crude being driven by speculation is indisputable. That isn't to say the wealth effect largely in China and India isn't adding to the overall cost of crude, surely it is. But when over 60% of the money being poured into crude is from large investment houses who have no intention of ever taking physical delivery of the product.

Speculators only trade the financial instrument, such as Crude oil futures.
They accordingly appears as buyers as well as sellers, and does not in the long run change the balance between demand and supply. Speculators can only drive prices short term, which they of course try to do when the underlying market is moving.
What has changed over the past decades, is the appearance of the increasingly large end-users, who only buy for consuming. China is by far the single largest country here. That will just continue in the future.
Other commodities has seen the same development.
Unfortunately energy is not treated as the precious resource it should be here in Asia.
Many governments tends to subsidize oil products, which only increase overconsumption and do nothing to encourage energy preservation at all.

[Edited 2011-04-11 22:22:10]

Quoting CALPSAFltSkeds (Reply 45): Also, will it take lots of energy to produce and what will be the cost of the final product?

Not all biofuels use lots of energy. The new plant BA is sponsoring in London will convert household waste to jet fuel. It will use the waste to produce gas that will run its own power station to convert the gas to fuel. Waste products are fertiliser and electricity. The plant will produce enough fuel for the LCY operation when it comes on line.
The cost of the fuel has not been quoted! But there is an incentive in Europe because CO2 emission rights come into force at the end of this year. Airlines will have to pay for increased CO2 emissions. This new fuel will have zero emissions so will be exempt.
It all really hangs on what the price of a CO2 emission right will be. No one knows yet because airlines are not trading them, but they will add to the cost of extra fuel over the baseline.

Oil reached around 140$ per barrel before the crisis, dropped to aroun 50$, and as soon as the economy showed signs of recovery (IMO we are still not in true recovery), returned to its "natural" price of 100$. Although there is certainly a speculative component in the oil price, I don't think it is alone responsible for this.
IMO the natural price range for oil should currently be around 90-100$, with anything above that caused by speculation, political events, etc.
Airlines today are much better prepared for 100$ oil than before, but anything above that for an extended period of time would require changes to the business model, like reducing frequencies, increasing average aircraft size, reducing capacity, etc

Quoting genybustrvlr (Reply 63): 1) Oil is a global commodity. The U.S. Government has no power to cap the price. All it could do is subsidize the price to create an artificial cap - which is an absolutely terrible idea for too many reasons to possibly list here. 2) Oil prices did not cause or influence the global downturn. Poor risk management and sloppy loan origination were the primary causes. When over extended US homeowners could no longer extract cash from their homes, the effects rippled through the broader economy by means of deceased consumer spending, layoffs, foreclosures, property devaluation, blah blah blah, rinse and repeat until government bailout and stabilization of banks. 3) Speculation is not the problem. Oil, like all commodities, results in physical delivery at contract expiration. Therefore, a price bubble cannot sustain itself for nearly as long other asset bubbles, such as housing and equities, because the contract owner must take physical possession of the oil or sell the contract (at any price the buyer is willing to pay). If there was a bubble (i.e. more supply than end user demand) the price would fall rapidly because hedge funds and other speculators have neither the facilities to take physical delivery of oil nor the appetite to pay someone else to store it.

1. Oil is traded in U.S. markets, the government could easily put restrictions on it. They could also make it a public utility. I was suggesting it was a bad idea and the effect it would have on the global economy.
2. It was a comparison. I did not say oil prices caused the current problem. I said that if restrictions were put in place the current problem would be a tremor compared to what would happen.
3. I did not say to eliminate speculation. I do not agree with eliminating speculation.

My post was in response to this:

Quoting Asiaflyer (Reply 64): The 2006 U.S. Senate report showing that 60% of the price of a barrel of WTI crude being driven by speculation is indisputable. That isn't to say the wealth effect largely in China and India isn't adding to the overall cost of crude, surely it is. But when over 60% of the money being poured into crude is from large investment houses who have no intention of ever taking physical delivery of the product.

Quoting genybustrvlr (Reply 63): 1) Oil is a global commodity. The U.S. Government has no power to cap the price. All it could do is subsidize the price to create an artificial cap - which is an absolutely terrible idea for too many reasons to possibly list here. 2) Oil prices did not cause or influence the global downturn. Poor risk management and sloppy loan origination were the primary causes. When over extended US homeowners could no longer extract cash from their homes, the effects rippled through the broader economy by means of deceased consumer spending, layoffs, foreclosures, property devaluation, blah blah blah, rinse and repeat until government bailout and stabilization of banks. 3) Speculation is not the problem. Oil, like all commodities, results in physical delivery at contract expiration. Therefore, a price bubble cannot sustain itself for nearly as long other asset bubbles, such as housing and equities, because the contract owner must take physical possession of the oil or sell the contract (at any price the buyer is willing to pay). If there was a bubble (i.e. more supply than end user demand) the price would fall rapidly because hedge funds and other speculators have neither the facilities to take physical delivery of oil nor the appetite to pay someone else to store it.

1. Oil is traded in U.S. markets, the government could easily put restrictions on it, such as the subsidies you mentioned or dump reserves into the market. They could also make it a public utility. I was suggesting it was a bad idea and the effect it would have on the global economy.
2. It was a comparison. I did not say oil prices caused the current problem. I said that if restrictions were put in place the current problem would be a tremor compared to what would happen.
3. I did not say to eliminate speculation. I do not agree with eliminating speculation.

My post was in response to this:

Quoting Asiaflyer (Reply 64): The 2006 U.S. Senate report showing that 60% of the price of a barrel of WTI crude being driven by speculation is indisputable. That isn't to say the wealth effect largely in China and India isn't adding to the overall cost of crude, surely it is. But when over 60% of the money being poured into crude is from large investment houses who have no intention of ever taking physical delivery of the product.

Quoting fuelfool (Reply 67): My post was in response to this:

Which not even was posted by me!! ???

Anyhow, interesting regarding the topic is the buying side has not hedged much in this upturn, but sellers has been seen more active hedging their exposure. My source is an analyst who has access to market data.
This indicates to me that this is currently not a speculative bubble, but rather opposite.
When everyone has hedged their needs, like airlines did 2008, then the speculative part of the market can be ready to drop again.

Quoting lucky777 (Reply 55): The 2006 U.S. Senate report showing that 60% of the price of a barrel of WTI crude being driven by speculation is indisputable. That isn't to say the wealth effect largely in China and India isn't adding to the overall cost of crude, surely it is. But when over 60% of the money being poured into crude is from large investment houses who have no intention of ever taking physical delivery of the product.

Quoting Asiaflyer (Reply 69):

There you go. I was looking more for the text not the poster.

Quoting fuelfool (Reply 67): 1. Oil is traded in U.S. markets, the government could easily put restrictions on it. They could also make it a public utility. I was suggesting it was a bad idea and the effect it would have on the global economy.

They cannot make Oil a public utility, it does not work that way. The reason public utilities exist is because they have a virtual monopoly on their products, and to prevent the company from taking advantage of the consumer. This is no where near what goes on in the oil markets.