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Worldwide Capacity Reduction-effect On Oil Price?  
User currently offlineSevenHeavy From United Kingdom, joined Mar 2004, 1146 posts, RR: 10
Posted (5 years 10 months 2 weeks 6 days 3 hours ago) and read 1794 times:

In the last week or two we have seen huge reductions in flying confirmed by AA, UA, CO and to a lessor extent, QF. At least 6 airlines have gone since the beginning of the year, undoubtedly with more to follow. Those airlines that remain will almost all cut capacity or at the very least stagnate.

In addition to this we have seen the first reports that demand for oil in the developing world is slowing.

I realise that air travel accounts for a miniscule percentage of worldwide oil consumption, however it looks like we are seeing the first real adjustments to account for the high price of oil and they are deservedly significant.

What are your thoughts on what, if any effect this will have on oil prices?

Is it merely a drop in the ocean and not even worth considering? Is it the start of a huge drop in consumption which will cause the investors to move their money elsewhere? Will OPEC and the other big players take notice and maybe even reduce output to protect their inflated prices?

All thoughts welcome!


So long 701, it was nice knowing you.
4 replies: All unread, jump to last
 
User currently offlineBurkhard From Germany, joined Nov 2006, 4360 posts, RR: 2
Reply 1, posted (5 years 10 months 2 weeks 6 days 3 hours ago) and read 1785 times:

I see that the current oil price has reached within months what our political leaders and environment activists didn't achieve in 30 years - we start to get aware that we wasted it and can use it more efficiently.

I personally hope that oil stabilizes now in the 110-120$ range - since this does not threaten our industry, but produces enough pressure to develop alternatives and, as the biggest new alternative, increased efficiency.


User currently offlineDocLightning From United States of America, joined Nov 2005, 18704 posts, RR: 58
Reply 2, posted (5 years 10 months 2 weeks 6 days ago) and read 1678 times:



Quoting Burkhard (Reply 1):
I personally hope that oil stabilizes now in the 110-120$ range - since this does not threaten our industry, but produces enough pressure to develop alternatives and, as the biggest new alternative, increased efficiency.

I would like to see it continue to about US$2-300/bl, but slowly. This would force us out of using oil altogether except in specialized applications.

If it happens too suddenly we won't have time to develop the alternative technologies (biofuel, etc.)


User currently offlineMiller22 From United States of America, joined Nov 2000, 713 posts, RR: 4
Reply 3, posted (5 years 10 months 2 weeks 5 days 23 hours ago) and read 1648 times:

To answer the original question, I heard somewhere that the actual supply and demand cost of oil is about $50. The other $70 is speculation. If this is true, the reduction in capacity will only affect the price of oil in-so-much as the speculation dwindles.

User currently offlineLAXintl From United States of America, joined May 2000, 24325 posts, RR: 47
Reply 4, posted (5 years 10 months 2 weeks 5 days 23 hours ago) and read 1641 times:

I dont believe the schedule cuts will have much effect on global oil prices.

I've seen a statistic that aviation accounts for 4% of global petroleum use, so the schedule cuts we are talking about at most are a tiny fraction of a percent at most.

Ultimately demand for oil is driven much more by the continued economic growth globally then what the aviation sector does or does not do directly.



From the desert to the sea, to all of Southern California
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