In this article, I saw an interesting paragraph...
"Ed Silliere, vice president of risk management at Energy Merchant Corp., said he believes market sentiment has shifted so strongly that oil prices will fall below $40 a barrel before the year is up. The financial incentive is strong for refiners to make as much heating oil as they can right now, Silliere said."
Would this reduction in oil prices have a big impact on Jet fuel prices? As we all know, jet fuel has been so expensive lately that any decrease in cost will help...but would this be enough to make a difference in some of the carriers in bankrupsy or on the verge of bankrupsy?
Moman From United States of America, joined Aug 2004, 1054 posts, RR: 4
Reply 1, posted (10 years 4 months 2 days 22 hours ago) and read 1718 times:
Well I thought I would post a 'rebuttal', if you will, to your post. This is from the Nov 1, 2004 issue of Business Week:
"Oilman Boone Pickens, who came to prominence as an 1980s corporate raider, has bet big lately on rising oil prices -- and won. His Dallas commodity fund is up 390% this year on his prescient prediction that oil would hit $50. Here's what Pickens, 76, had to say, in a recent meeting with BusinessWeek editors:
On where oil prices are headed:
I'll say it: $60 before $40. I think that will happen. I think we've seen $40 oil for the last time."
I wouldn't count on oil costs going down. The best carriers are those that plan their business and costs for it being at $50/brl and then get lucky and only pay $40/brl.
But to answer your question, IMO, I don't think the price of oil dropping to $40 alone will provide enough breathing room for the airlines, although it would certainly help.
Flying-Tiger From Germany, joined Aug 1999, 4171 posts, RR: 35
Reply 3, posted (10 years 4 months 2 days 21 hours ago) and read 1644 times:
Other way round. The major carrier would benifit more as the fuel increases are in % less per ticket due to the higher average prices compared to the LCCs. LCCs have creaded a high artifical demand with their bottom-low prices - and as soon as these get to high, i.e. by strongly rising fuel prices, these customers are the first to back off from buying tickets, not the business people flying with the big ones.
I agree with him, 60$/barrel are more likely, the general trend shows oil prices going up due to various reasons. A dip down at the moment could be just a momentarily influcence and can easly turn the other way round any day.
AA737-823 From United States of America, joined Mar 2000, 6019 posts, RR: 12
Reply 6, posted (10 years 4 months 2 days 17 hours ago) and read 1507 times:
Alright, America, it's time to do something about this-
I expect all of us in our backyards tomorrow morning, digging. It's too expensive to buy it from someone else, so get your own!
AND- with MY plan, the amount of oil saved by consumers producing their own dino juice will lower prices- enabling all the airlines to return to profitability almost overnight!!!
Vote MEA Middle East Airlines (Lebanon)">ME 2008.
Gosh, when someone above said that oil would see $60 before $40, I had my first reality check. I'm only in my 20s- ergo I don't remember the crises of the 1970s.
Remember, as far as airlines go, the smart ones were the ones that got themselves hedged. Southwest has 80% of their oil hedged at... what was it, $0.89 per gallon of JetA? For the next year? It was something way lower than current market price. Some of the majors haven't figured out the idea of hedging yet. We'll see how it goes.