KarlB737
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Ready For $262/Barrel Oil?

Sun Jan 29, 2006 5:52 am

 
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TK787
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Sun Jan 29, 2006 5:57 am

Time for hybrid jets?
 
DeltaGuy
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Sun Jan 29, 2006 6:07 am

I wouldn't take to heart just one man's opinion, but I wouldn't say it's not unrealistic to see a big spike if anything happens over in Iran or elsewhere. Either kill more of them, or get ourselves into a position to be less dependant on other nation is the only solution I can see.

DeltaGuy
"The cockpit, what is it?" "It's the little room in the front of the plane where the pilot sits, but that's not importan
 
A319XFW
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Sun Jan 29, 2006 6:12 am

I read on here:

http://news.bbc.co.uk/1/hi/business/4649580.stm

that according to estimates, Alberta has got the 2nd largest oil reserves in the world (after Saudi Arabia). It wasn't worth exploring this before due to the low price of oil, but now it's getting more and more worth it.
No doubt Dubya will want a piece of it! lol
 
N79969
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Sun Jan 29, 2006 6:29 am

Without going into how realistic the scenario is, those prices would completely decimate civil aviation. Virtually all discretionary travel would cease, business travel would be limited to the barest minimum, numerous airlines would be shoved over the edge into collapse.

Actually most economies would ground to a halt if that were to occur.
 
StevenUhl777
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Sun Jan 29, 2006 6:32 am

The $262/barrell is the worst case situation, if the Saudi government fell. The other six scenarios, if they happened, would take it to $115/barrel or so. Still, not very encouraging....
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
iowaman
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Sun Jan 29, 2006 6:51 am

It simply wouldn't get that high. Just pure economics would either bring that price down or find something else cheaper. As said above as the price goes up it makes it more worth while to explore new oil fields and build new refineries as well as refurbish the current ones to make them more efficent.
 
N79969
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Sun Jan 29, 2006 6:55 am

Quoting StevenUhl777 (Reply 5):
The $262/barrell is the worst case situation, if the Saudi government fell. The other six scenarios, if they happened, would take it to $115/barrel or so. Still, not very encouraging....

Even $115 would be like a "meteor strike" on the airline industry if it occured rapidly enough. Who would be left standing after the dust cleared? I think even financially healthy airlines would be hard pressed to survive at those prices.
 
Poitin
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Sun Jan 29, 2006 6:57 am

Quoting A319XFW (Reply 3):
I read on here:

http://news.bbc.co.uk/1/hi/business/4649580.stm

that according to estimates, Alberta has got the 2nd largest oil reserves in the world (after Saudi Arabia). It wasn't worth exploring this before due to the low price of oil, but now it's getting more and more worth it.
No doubt Dubya will want a piece of it! lol

As I understand it, the United States has the largest reserve of oil -- however it is shale oil (see http://en.wikipedia.org/wiki/Oil_shale ) and a bear to extract.

As for Alberta, I believe it is oil sand, much easier to extract, but still even larger than the Saudi oil reserves.

A $100 a barrel, I think you will see some major developement of these reserves, but we will all be freezing in the dark for several years until it comes on line.

Time to fill up my chain saw while I still can and go cut some firewood.

[Edited 2006-01-28 23:00:56]
Now so, have ye time fer a pint?
 
DATAMINER
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Sun Jan 29, 2006 6:58 am

Quoting A319XFW (Reply 3):
Alberta has got the 2nd largest oil reserves in the world (after Saudi Arabia). It wasn't worth exploring this before due to the low price of oil, but now it's getting more and more worth it.

Oil sands more precisely, and as vast as it is it's very difficult to extract. Whereas a well in Saudi Arabia might need 1 part energy to extract 30 parts of oil energy, the ratio here is 1 to 1.5.
 
widebody
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Sun Jan 29, 2006 8:34 am

I wouldn't think such prices would destroy civil aviation, I think a system would be put in place where pax will pay for the increases. Fares are decreasing every day, they can survive a substantial increase. It just means the pricing structure would have to be changed. Shortage would be a problem though.
 
Orion737
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Sun Jan 29, 2006 8:38 am

Higher fuel prices, i hope, wont lead to airlines cutting back further service levels. I can envisage US airlines reducing food service to a single peanut per passenger, if oil prices rise.
 
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airportugal310
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Sun Jan 29, 2006 8:43 am

Quoting Orion737 (Reply 11):
Higher fuel prices, i hope, wont lead to airlines cutting back further service levels. I can envisage US airlines reducing food service to a single peanut per passenger, if oil prices rise.

Wouldnt be surprised in the least.
Usually labor suffers first though....so expect the worst in that department.

Quoting Widebody (Reply 10):
I wouldn't think such prices would destroy civil aviation, I think a system would be put in place where pax will pay for the increases. Fares are decreasing every day, they can survive a substantial increase. It just means the pricing structure would have to be changed. Shortage would be a problem though.

Agreed. I doubt even the B6's and WN's of the industry could afford NOT to increase the price a legit amount. Unless you like watching your profits go away....in that case...carry on.
I sell airplanes and airplane accessories
 
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Stitch
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Sun Jan 29, 2006 8:43 am

Also remember the fall of the House of Saud does not mean Saudi Arabian oil stops, and if it did, believe me the EU and Russia would invade, much less the US. And since we're "right next door"...
 
L-188
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Sun Jan 29, 2006 9:10 am

Quoting A319XFW (Reply 3):
Alberta has got the 2nd largest oil reserves in the world (after Saudi Arabia). It wasn't worth exploring this before due to the low price of oil, but now it's getting more and more worth it

Correct as the prices climb the incentive to explore goes up. And while there is not the big strikes today as there was before, there is still a lot of oil in the ground.

At this time, I think it is also worthy to point out that Hitler was able to run a war machine for the last two years without real access to crude through coal gasification. I don't think this technology is obsolete either.

Quoting Iowaman (Reply 6):
Just pure economics would either bring that price down or find something else cheaper.

Correct. I remember reading one story that said that ethonol production starts becoming economic when oil is in the mid 40's...ditto for those oil sands.

Quoting Stitch (Reply 13):
Also remember the fall of the House of Saud does not mean Saudi Arabian oil stops, and if it did, believe me the EU and Russia would invade, much less the US

Russia wouldn't, they are a net exporter at this point.
OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
 
StevenUhl777
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Sun Jan 29, 2006 9:52 am

Quoting N79969 (Reply 7):
Who would be left standing after the dust cleared? I think even financially healthy airlines would be hard pressed to survive at those prices.

Yes indeed. So much for UAL's $50/barrell prediction...  Yeah sure
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
ContnlEliteCMH
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Sun Jan 29, 2006 10:19 am

Quoting Widebody (Reply 10):
I wouldn't think such prices would destroy civil aviation, I think a system would be put in place where pax will pay for the increases. Fares are decreasing every day, they can survive a substantial increase. It just means the pricing structure would have to be changed.

Your scenario assumes that demand will remain relatively constant. It won't. And this would be death for many airlines because the fare increase you speak of will not increase net revenue per passenger; it only offsets increased fuel cost. So you get the same net revenue per passenger but fewer passengers. For an industry dancing on a razor's edge in terms of profit/loss, it would destroy quite a few airlines if the price remained high.

And if you doubt that demand will drop, take it from me: I travel every week to a client. Airfare in the month of February is already pretty high. I'm accustomed to paying about $350/round trip, a figure which I can tolerate and which I'm sure is quite profitable for Continental, since they gross about 20 cents per mile when you take taxes and fees out of the ticket price. But the fare in February is approaching $600 per trip. That's really too rich for my blood. I'm into taking my money home to my family, not paying it in expenses.

So I have two choices: fly another airline, which I'm doing this upcoming week, or drive. If it gets really bad, I'll just ask my client to allow me to work from home.

Therein lies a good question! Supposing that oil were to really skyrocket, whose economies will be hurt more? Those who are in the business of producing goods for consumption by foreign markets, or those whose primary products are intellectual services? The former requires people to be in specific places to produce goods; the latter only requires collaboration, via telephone, Net Meeting, and videoconferencing. I personally can do all of my work without setting foot outside of my home, and I'm not alone. It's an interesting question, one which I hope I never see answered.
Christianity. Islam. Hinduism. Anthropogenic Global Warming. All are matters of faith!
 
jacobin777
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Sun Jan 29, 2006 10:36 am

well....given that countries such as Iran are on dependent on fuel also (for income), I don't think Iran is dumb enough to shut their spigots, as it would be disasterous for their country


I think the bottom line is nations need to develop alternative energy, because there is only so much fuel around...
"Up the Irons!"
 
Rottamo
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Sun Jan 29, 2006 10:37 am

Quoting N79969 (Reply 4):
Without going into how realistic the scenario is, those prices would completely decimate civil aviation. Virtually all discretionary travel would cease, business travel would be limited to the barest minimum, numerous airlines would be shoved over the edge into collapse.

Actually most economies would ground to a halt if that were to occur.

You are simply wrong because oil is only one part of total costs of civil aviation.

Let’s assume that oil is really five times more expensive than now.

This is from
AMR CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)

Aircraft fuel 1,585
Total operating expenses 5,552
=> fuel is 29% of total costs.
Lets assume that they don't change their operations (they will, if oil is more expensive) then total operating expenses excluding oil are 3,967
and fuel cost when oil price is five times higher than now: 7,925

=> Their operating expenses are 115% higher than now.
Do you think that people will stop flying if tickets are 115% more expensive than now?

Of course not. They will reduce flying but saying that they will stop completely is total nonsense.
If we measure price of flying in working hours then I guess that prices will be same than during late 70's. I mean that we measure how many hours you have to work to pay your ticket. Salaries are now days a lot higher than seventies and fares are a lot lower.

So end of civil aviation if oil is $262 is simply not true. And same applies to cars.

Rottamo
 
moparman
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Sun Jan 29, 2006 10:39 am

I think most of these increases are a scheme for oil company profits. I have nothing against making a dime, but when you have companies like Exxon-Mobile making $100 billion - YES $100,000,000,000 in PROFITS then there is a problem - especially when these profits are up more than 100% over the previous year. Also in the article: are you all aware that this guy is a billionare? A multi-billionare in fact. He couldn't care less what the price of oil is or how much it costs to fly. George Soros was actively engaged in trying to raise oil prices for most of the 1990's... WHY IS THAT? I think his prespective is flawed.
"Harming a patient is unethical, but I can inflict as much pain as I like" Dr. Phlox
 
Rottamo
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Sun Jan 29, 2006 10:53 am

Quoting ContnlEliteCMH (Reply 16):
can tolerate and which I'm sure is quite profitable for Continental, since they gross about 20 cents per mile when you take taxes and fees out of the ticket price.

So you are paying 20 cents per mile.

Here is some info from JetBlue's third quarter announcement:

Quote:

"For the third quarter 2005, yield per passenger mile was 7.87 cents, up 6.0% compared to 2004 on a 4.8% increase in average length of haul. Operating revenue per available seat mile (RASM) increased 9.4% year-over-year to 7.15 cents. Revenue passenger miles increased 30.7% from the third quarter of 2004 to 5.5 billion. Available seat miles grew 28.2% to 6.3 billion. Operating expenses for the third quarter were $439.1 million, up 46.1% from the third quarter of 2004. Operating expense per ASM (CASM) for the third quarter 2005 increased 13.8% year-over-year to 6.93 cents. On a fuel-neutral to prior year period basis, CASM increased 2.7% to 6.26 cents. Operating margin, on a fuel-neutral to prior year period basis, was 12.6% in the third quarter 2005. During the quarter, realized fuel price was $1.70 per gallon, a 57.9% increase over third quarter 2004 realized fuel price of $1.08."

if JetBlues CASM will increase 120% it will be 15,25 cents.

Rottamo
 
monorail
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Sun Jan 29, 2006 11:00 am

Quoting Moparman (Reply 19):
I think most of these increases are a scheme for oil company profits. I have nothing against making a dime, but when you have companies like Exxon-Mobile making $100 billion - YES $100,000,000,000 in PROFITS then there is a problem - especially when these profits are up more than 100% over the previous year.

 checkmark 
You hit the nail on the head. It's sickening that increases in the price of oil are almost entirely contrived. The oil companies try to justify it as "supply and demand." Bullsh!t
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AS907
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Sun Jan 29, 2006 11:01 am

Let's open up ANWR. Get the hippies out of the way who have no idea what they're talking about... and just do it. Living up here in Alaska and having a father who is in charge of a lot of drilling up here, I know a lot about the environmental risks... and trust me... the media has no idea what they're talking about when it comes to the "risks" up here.
 
ContnlEliteCMH
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Sun Jan 29, 2006 11:23 am

Quoting Rottamo (Reply 18):
Do you think that people will stop flying if tickets are 115% more expensive than now?

Absolutely, yes. Many of us will simply *stop* flying. A significant percentage of people will stop flying, both for leisure and for business. You are correct that not all aviation will cease, but any sizeable drop in demand (say, as little as 5%) would pack a hefty punch on the bottom line for nearly all carriers, and the industry as a whole. There will always be somebody who's willing to pay anything to fly, but that's not the vast majority of fliers.

I am not going to fly weekly at 115% over $350. I'm not going to pay $750 every week to fly. I'll drive first. And the reason why is simple math. Assuming 50 weeks annually, your 115% increase would vacuum $20,000 right out of my wallet. That's not just $20,000; that's $20,000 MORE than the $15,000 I already budgeted. $35,000 is nearly as much as the average American earns in a single year. Now do you REALLY think people won't stop flying?

My business partner take his family of four tomorrow from Chicago to Orlando on Southwest, for about $800 roundtrip. Do you think he's flying if the same trip is $1700? No way. And he's typical of a leisure traveler.

And in terms of driving, $750/week on a 1000 mile round trip is a whopping 75 cents per mile. I could buy a brand new luxury car and not spend that much to drive; on my used cars, my actual cost of operation would be under 20 cents per mile. And on a 500 mile journey (the average trip in the U.S. east of the Mississippi is about 500 miles), I would take only slightly longer to drive than I would to fly, particularly if I have to connect.

You want to dismiss the impact of reduced actual passenger miles by saying "They'll change their ops." Of course they will. But this generality flies in the face of your otherwise detailed analysis vis-a-vis fuel. HOW MUCH will they change. The answer is, "Not as much as you think."

In the airline biz, you can furlough employees, you can discontinue routes, and you can shutter whole airport operations. True enough. You can't so easily just chuck your airplanes, particularly if they're leased. And that's the rub. Airlines cannot change supply to exactly meet demand, which is why the slowdown would devastate them. They aren't fast food restaurants, who can simply send employees home early if business is slow for the day.

It's not really about the cost of the fuel. It's about the impact of price on demand, and the inability of the industry to easily alter supply.
Christianity. Islam. Hinduism. Anthropogenic Global Warming. All are matters of faith!
 
psyops
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Sun Jan 29, 2006 11:35 am

Ah, the great misunderstood oil sands. From reading this thread I can see that it is still very much not on the radar screens of many.

It doesn't need to be discovered - we already know where it is.

Expensive? We make oil from it for $9US per barrel, then sell it for about $65US. Not bad margin I guess.

Vast? Yes - proven reserves larger than the middle east. Unproven accessible with better technology (just like to types of technology they have had to develop and use in some depleted middle eastern fields) into the trillions (yes, with a "t").

Hard to make? Nah. Already pumping a couple million barrels a day from up here.

How do I know? Well, I happen to work "there". Naturally our friends in the US are lining up for a piece of the action, but so far the French and Chinese have out-invested them in the resource.

Cheers....
 
ltbewr
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Sun Jan 29, 2006 12:42 pm

If oil prices were to ever go above US$100/bbl, I think we would see major worldwide changes in our lives. The world could see major dislocations we have yet to even concieve.
If it was due to terror takeovers or destruction of Saudia Arabia's oil infrastructure or mass murder of it's leadership, the USA with NATO would go to war there, much like we did in the Gulf War vs. Iraq for their takeover of Kuwait. There would have to be government rationing schemes put into place much like done in WWII to assure fair access. People would have to work from home more, go into work or school maybe only 3 days a week working 12 hours a day to make it up. People would have to carpool to/from work or use mass transit. All would have to massively reduce all energy usage. We would be in a real war we all would have to fight and support.
 
Rottamo
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Sun Jan 29, 2006 12:44 pm

Quoting ContnlEliteCMH (Reply 23):
Absolutely, yes. Many of us will simply *stop* flying. A significant percentage of people will stop flying, both for leisure and for business. You are correct that not all aviation will cease, but any sizeable drop in demand (say, as little as 5%) would pack a hefty punch on the bottom line for nearly all carriers, and the industry as a whole. There will always be somebody who's willing to pay anything to fly, but that's not the vast majority of fliers.

I agree that demand might drop a lot. Let's say 50%. When people flew 50% less than now? Early 90's or early 80's? I just try to say that yes, people are willing to buy less when price is higher but flying does not stop. And for current airline companies that kind of drop in demand is disaster.

Quoting ContnlEliteCMH (Reply 23):
I am not going to fly weekly at 115% over $350. I'm not going to pay $750 every week to fly. I'll drive first. And the reason why is simple math. Assuming 50 weeks annually, your 115% increase would vacuum $20,000 right out of my wallet. That's not just $20,000; that's $20,000 MORE than the $15,000 I already budgeted. $35,000 is nearly as much as the average American earns in a single year. Now do you REALLY think people won't stop flying?

Yes. You will fly less but you don't stop flying.

Quoting ContnlEliteCMH (Reply 23):
My business partner take his family of four tomorrow from Chicago to Orlando on Southwest, for about $800 roundtrip. Do you think he's flying if the same trip is $1700? No way. And he's typical of a leisure traveler.

LOL. You guys are so spoiled with cheap fares. I am originally from Finland. We don't have much competition and fares are quite high. I just checked that our national carrier (Finnair) ask over $400 HEL-LON return ticket (four weeks from now, Friday-Sunday, 1150 miles). Despite that people still fly from Helsinki to London and other countries as well.
We just fly a lot less that you guys in US. And we usually don’t do weekend trips.

Quoting ContnlEliteCMH (Reply 23):
And in terms of driving, $750/week on a 1000 mile round trip is a whopping 75 cents per mile. I could buy a brand new luxury car and not spend that much to drive; on my used cars, my actual cost of operation would be under 20 cents per mile. And on a 500 mile journey (the average trip in the U.S. east of the Mississippi is about 500 miles), I would take only slightly longer to drive than I would to fly, particularly if I have to connect.

I have sometimes driven from Helsinki to Lapland (in Finland) because flying is so expensive. It is more than 700 miles, one way. But quite many people fly every day from Helsinki to Lapland because they can afford to do that.

Quoting ContnlEliteCMH (Reply 23):
You want to dismiss the impact of reduced actual passenger miles by saying "They'll change their ops." Of course they will. But this generality flies in the face of your otherwise detailed analysis vis-a-vis fuel. HOW MUCH will they change. The answer is, "Not as much as you think."

See my previous answers. I know precisely what it means if airfares are high and I also know that most of people I know fly regularly. Not as much as in US but they fly. I have paid (or my company paid) 500 EUR regularly when I flow from Helsinki to Stockholm (250 miles) several yes ago. Yes it was a lot and we planned carefully all out trips because it was so expensive. But we didn't swim.

Quoting ContnlEliteCMH (Reply 23):
In the airline biz, you can furlough employees, you can discontinue routes, and you can shutter whole airport operations. True enough. You can't so easily just chuck your airplanes, particularly if they're leased. And that's the rub. Airlines cannot change supply to exactly meet demand, which is why the slowdown would devastate them. They aren't fast food restaurants, who can simply send employees home early if business is slow for the day.

It's not really about the cost of the fuel. It's about the impact of price on demand, and the inability of the industry to easily alter supply.

I completely agree with you that major problem for most extremely capital intensive industries like aviation is that they can't adjust their supply easily and that leads to poor profitability. When you have overcapacity it is cheaper to decrease your price than cut your capacity.

I mean: stop flying <> reduce flying.

We have much more expensive gasoline (for cars) here in Europe. I guess that price is double vs. US. And we still drive. Airfares are very high in some parts of Europe and we still fly. Just less than in US. And we are quite happy.  

Rottamo

[Edited 2006-01-29 04:45:48]

[Edited 2006-01-29 04:47:39]
 
Cadet57
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Sun Jan 29, 2006 1:03 pm

Quoting Rottamo (Reply 26):
We have much more expensive gasoline (for cars) here in Europe. I guess that price is double vs. US. And we still drive. Airfares are very high in some parts of Europe and we still fly. Just less than in US. And we are quite happy.

Your country may have high gas prices, but it has always been that way in europe(correct me if im wrong) but to us the day gas pegged 2.10 a gallon it was a shock. We never saw this sort of thing coming. And now if were faced with 3.00 and up per gallon, or like we saw in atlanta after Katrina with 6.00 and 7.00 a gallon. The US will be crippled, we are not prepared for this. We have always assumed there would be a 1.69 price to fill our 5.8litre V8 suvs and our 19mpg hummers.

As for airfares, no offense, but your country is much smaller and a P2P flight is prob less than 2 hours. Even if it was to other points in europe: France, Germany....etc, its a short flight. In the US unless your doing a BOS-LGA, or ORD-MSP or close pairs like that, its all longer flights, and transcons. Our airline industry would not be able to surrvive an increase to even 70-100 DPB, we just gott hope it doenst come to 262 a barrel.
Doors open, right hand side, next stop is Springfield.
 
b757300
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Sun Jan 29, 2006 1:11 pm

Sounds like Soros is trying once again to drive up the price of oil and tank the U.S. economy. The moron seems to get his kicks on wrecking economies and toppling foreign governments.
"There is no victory at bargain basement prices."
 
Falcon84
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Sun Jan 29, 2006 1:25 pm

Quoting Iowaman (Reply 6):
It simply wouldn't get that high.

It will if Iran goes off in the ME. If Iran keeps up this doomsday rhetoric, I can see it going over $100 a barrel.

And if that happens, Mr. Bush will have no choice but to tap the Strategic Reserve, if only to calm a few nerves on the market.

Quoting ContnlEliteCMH (Reply 16):
it would destroy quite a few airlines if the price remained high.

It could destroy the entire industry, if it goes well above $100 a barrel.

Quoting B757300 (Reply 28):
Sounds like Soros is trying once again to drive up the price of oil and tank the U.S. economy. The moron seems to get his kicks on wrecking economies and toppling foreign governments.

Give me a break. You'd find a way to make this a liberal thing, wouldn't you.

Someone mentioned opening ANWR. I've become a convert to that, but this adminstration needs to step up-now-and stop pretending that more oil is the answer, and start the brightest minds in business, acedemia and goverment on a program to use alternate sources of fuel. Even if the OK was given to ANWR right now, it'd be a decade till it bore any fruit.

I saw on ABCNews last week that Iceland is converting trucks and busses to run on water. Why can't we do the same here. Kick the oil habit, and then assholes in places like Iran can't have the clout they do. What part of that doesn't Washington and Detroit Understand.
Work Right, Fly Hard
 
L-188
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RE: Ready For $262/Barrel Oil?

Mon Jan 30, 2006 10:24 am

Quoting Falcon84 (Reply 29):
I saw on ABCNews last week that Iceland is converting trucks and busses to run on water.

Explain that process to me.

I know they are big on Hydrogen power, but the only reason that is viable there is because of the Geothermal reserves that can provide heated water for powering electric generators so that they Hydrogen can be produced through electrolis (spl?)

The only way the rest of us can produce that much power is either through nuclear or a lot of hydroelectric.
OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
 
halls120
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RE: Ready For $262/Barrel Oil?

Mon Jan 30, 2006 10:40 am

Quoting KarlB737 (Thread starter):
Ready For $262/Barrel Oil?

I doubt it will reach this level, but if it does, thank you great grandpa for not selling those south texas mineral rights!!!
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
flyingbronco05
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RE: Ready For $262/Barrel Oil?

Mon Jan 30, 2006 11:22 am

Ready For $262/Barrel Oil?

I sure am!

Signed George W. Bush

[Edited 2006-01-30 03:23:38]
Never Trust Your Fuel Gauge
 
ContnlEliteCMH
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RE: Ready For $262/Barrel Oil?

Wed Feb 01, 2006 12:53 pm

Quoting Rottamo (Reply 26):
I completely agree with you that major problem for most extremely capital intensive industries like aviation is that they can't adjust their supply easily and that leads to poor profitability. When you have overcapacity it is cheaper to decrease your price than cut your capacity.

It may be easier. It's also pointless. Whether people stop flying, or the airlines take huge losses on every passenger they fly, the result is the same: bankrupt carriers. Look at Delta and Northwest. A 5% drop in passengers or a 5% drop in prices will hurt them the same way: it will kill them.

And actually, that's exactly what SHOULD happen. The free market is clever that way. If prices mean that a lot of people stop flying, then two dead carriers suddenly reduces capacity. The survivors can raise prices, and continue on. Ah, but then Chapter 11 gets in the way...

Quoting Rottamo (Reply 26):
We have much more expensive gasoline (for cars) here in Europe. I guess that price is double vs. US. And we still drive. Airfares are very high in some parts of Europe and we still fly. Just less than in US. And we are quite happy.

I've never understood why anybody's happy because their government has artificially inflated the cost of a good. My taxes here, which pale in comparison to those of the average European, are high and make me angry. I personally think anybody who believes we can tax our way to prosperity is a total moron -- or doesn't actually work. But I digress.

As for driving, you'll be interested to know that I have now officially decided to drive some or all of the remaining weeks on my contract with the big orange box in Atlanta. I love Continental, but they want an average of $525 per week for the next nine weeks, and I love my money far more than I love Continental. And it's all just math. The roundtrip is 1100 miles. $525 is nearly 50 cents per mile. The IRS allows me to deduct 48.5 cents per mile for driving my own car. My total cost of operation is about 20 cents per mile; my cashflow for operation (that's insurance, gasoline, and R&M) will actually only be about 14 cents per mile, and that's a high estimate.

I tell this to reinforce my point. When the price goes up, even Platinums quit flying. My pocketbook is going to benefit HUGELY. Instead of $4500 cashflow out to Continental, my actual cashflow will be about $1500. So that's $3000 I net. On top of that, I get to deduct about $4500 even though I only spent $1500. My income is such that I'm in a higher tax bracket, so that means I actually make money by driving because the taxes I don't pay are quite a bit higher than the cost of driving.

I decided a while ago that I would pay $350/round trip, up to $450 very rarely. Sometimes the airfare is as a low as $200; sometimes it's $700. But when it's consistently $500 or more, driving is just much better.
Christianity. Islam. Hinduism. Anthropogenic Global Warming. All are matters of faith!
 
cfalk
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RE: Ready For $262/Barrel Oil?

Wed Feb 01, 2006 2:32 pm

Quoting ContnlEliteCMH (Reply 33):
I've never understood why anybody's happy because their government has artificially inflated the cost of a good.

Not exactly happy, but it does encourage people to use less, and provides less funds to the Saudis. Can you imagine what would happen to oil prices if the US taxed gasoline at an extra $2 per barrel, and americans had more efficient cars (japanese or european standards)? Here's just a few things that would happen:

- Price of oil would be much lower, due to less demand.

- US Budget deficit would be smaller.

- US Trade deficit would be smaller

- US employment would increase, assuming US automakers get competitive and start exporting.

- Terrorist funding would get thin.

- Hugo Chavez suddenly realizes he has bankrupted his country and flees to Cuba.

- Less polution/greenhouse gases

- oil supplies last longer.

And those are just a few.

The hard part is to ease the taxes in slowly - like 10 cents per year, so that the economy slowly adjusts.
The only thing you should feel when shooting a terrorist: Recoil.
 
halls120
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RE: Ready For $262/Barrel Oil?

Wed Feb 01, 2006 10:24 pm

Quoting ContnlEliteCMH (Reply 33):
I personally think anybody who believes we can tax our way to prosperity is a total moron -- or doesn't actually work. But I digress.

Said digression welcomed. Far too many people actually believe that higher taxes create prosperity.
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
VonRichtofen
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RE: Ready For $262/Barrel Oil?

Wed Feb 01, 2006 11:22 pm

Quoting L-188 (Reply 30):
Explain that process to me.

I know they are big on Hydrogen power, but the only reason that is viable there is because of the Geothermal reserves that can provide heated water for powering electric generators so that they Hydrogen can be produced through electrolis (spl?)

The only way the rest of us can produce that much power is either through nuclear or a lot of hydroelectric.

They don't run on water, they use Hydrogen fuel cells and the by-product is water.

Iceland also uses the natural heat from volcanic activity in the area to produce electricity.

Kris
 
cfalk
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RE: Ready For $262/Barrel Oil?

Wed Feb 01, 2006 11:40 pm

Quoting ContnlEliteCMH (Reply 33):
I've never understood why anybody's happy because their government has artificially inflated the cost of a good. My taxes here, which pale in comparison to those of the average European, are high and make me angry. I personally think anybody who believes we can tax our way to prosperity is a total moron -- or doesn't actually work. But I digress.



Quoting ContnlEliteCMH (Reply 33):
I decided a while ago that I would pay $350/round trip, up to $450 very rarely. Sometimes the airfare is as a low as $200; sometimes it's $700. But when it's consistently $500 or more, driving is just much better.

Thinking about this further, I have another point to add that reinforces my arguement in reply 34.

As you said for yourself, a particular product/service/activity is worth a certain amount to each of us. You'll pay $500 for a ticket to New York, for example, but if it's higher, you will look for alternatives.

Let's assume that a person is willing to spend $3,000 per year for gas to drive to work every day in his own car (make it a Cadillac Escalade). Let's assume that he buys his gas at wholesale, at current prices. That means that $2,000 goes to OPEC (Al Qaeda, Hugo Chavez, corrupt Nigerians etc.). $1,000 goes to Exxon, including costs of transportation, refining and distribution, and a little bit of tax.

Now let's see what happens if there is a $2 federal gas tax. That would mean that about 50% of the price of the gas is federal and local taxes for a total price of around $5 per gallon.

Our sample dude is still only willing to spend $3,000 per year. But instead of the Escalade, he has a Monte Carlo or something like that. He still spends the same amount.

But of his $3,000, only a little more than $1,000 goes to OPEC, and the other $2,000 stays in the United States. Exxon makes the same as before, but you have a reduction in the trade and budget deficits, and all the other advantages I listed earlier.
The only thing you should feel when shooting a terrorist: Recoil.

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