NWDC10
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Airlines Tremble At Prospect Of $100/bbl

Tue Aug 22, 2006 3:05 pm

http://www.timebomb2000.com/vb/showthread.php?t=208849

Northwest officials declined to respond specifically to such suggestions. But in recent financial reports and news releases, Northwest officials have raised the possibility that the company may not be able to absorb escalating fuel costs.

Betsy Talton, spokeswoman for Delta, says high fuel prices "do pose a risk to our plan" to emerge from bankruptcy in 2007. "For 2006, we've seen a nearly $600 million impact from higher fuel prices."


Baggaley agrees that Continental is most at risk of entering bankruptcy protection if oil prices climb to three digits. Despite outperforming most other big carriers by several measures in the past couple of years, Continental has the smallest cash cushion. Continental spokesman David Messing declined to comment on that speculation.


Southwest CEO Gary Kelly discounts the likelihood of $100 oil. "We don't think the fundamentals justify the current price, and certainly not something as high as $100. There's a lot of fear included in the market price right now." Still, Kelly acknowledges that "world events could occur that could push the market price much higher." That's why, he says, Southwest hedges in the first place.

Any way you look at it, U.S. airlines would be overwhelmed by fuel prices approaching $3 a gallon, the jet fuel price that $100 oil would bring.

For consumers, $100 oil likely would lead to higher fares in the long run.
But as Heimlich notes, "It's one thing to raise fares; it's quite another for anyone to actually buy them."

Robert NWDC10
 
Alessandro
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RE: Airlines Tremble At Prospect Of $100/bbl

Tue Aug 22, 2006 7:06 pm

I doubt it as well, but it would mean that lot of airlines had to upgrade their
airplanes ASAP.
From New Yorqatar to Califarbia...
 
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northwestEWR
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 12:47 am

No, they would have to raise fare ASAP.
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Lumberton
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 1:13 am

Just a wild (and frightening) thought, but if the price of fuel begins to seriously threaten the existence of the airlines beyond their ability to cope (like rising ticket prices), could the Congress conceivably endorse a return to "regulation"--as in the days of the Civil Aeronautics Board? Frightening because something like the TSA would set aviation policy!   

Seriously, if the viability of the entire air transport system were threatened, the politicians would have to act, not just in the U.S., but anywhere.


Quoting NWDC10 (Thread starter):
But as Heimlich notes, "It's one thing to raise fares; it's quite another for anyone to actually buy them."

  

[Edited 2006-08-22 18:15:58]
"When all is said and done, more will be said than done".
 
YULWinterSkies
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 1:18 am

Quoting NWDC10 (Thread starter):
Southwest CEO Gary Kelly discounts the likelihood of $100 oil.

Well, I raise 2 hypotheses here :

1. He is bluffing and WN is already prepared
2. He's a loser

Quoting NWDC10 (Thread starter):
as Heimlich notes, "It's one thing to raise fares; it's quite another for anyone to actually buy them."

Good point.
When I doubt... go running!
 
747luvr
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 1:56 am

I shudder at the thought of $100/bbl of oil. UGH! I think that would equate to a world recession. IMO.  banghead   faint 
 
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falstaff
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 2:39 am

Quoting 747LUVR (Reply 5):
I think that would equate to a world recession

Sure would. Fuel prices raise the cost of everything. The railroad and shipping companies would have to raise costs to cover the bills too. Trucks that carry everything will raise prices too. Nearly everything is moved on a truck at one period of time. The price goes up across the board. Companies will cut back to pay for added fuel costs and then salaries will stay the same or go down. We will spend more on energy and less on fun stuff and big ticket items. It is a downward spiral. People talk about alternative fuels, but many of those have huge infrastructure costs and environmental risks worse than oil.

Here on the great lakes there still are some steam powered ships. The oldest ship on the lakes is 100 this year (St. Mary's Challenger 1906). She had a new engine installed in 1955. Several companies have postponed conversion of steam to diesel to save fuel cost. Fuel oil is cheaper. The labor cost of a steam engine was always higher than having a diesel, but now the gap is much smaller. There have even been a couple of steamers than have reentered service (Edward Ryerson 1960 and the Voyager Independent 1952) because of high demand for steel and shippers need the hulls to transport steel making resources. These ships once had the liability of being steamers now that is not such a big problem anymore. If oil prices go back down, then end is near for these ships.

If you think a NWA DC-9 is old you should see some of the ships on the lakes. They would consider the late 70s as new.
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silentbob
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 2:46 am

If it wasn't for the tons of cash annually handed to politicians by the oil industry, I honestly think that some in the government would be openly discussing heavily regulating oil/fuel prices and production. If the prices continue to go through the roof, based only on speculation and analyst opinions and not based on reality then regulation is something that needs to be considered.
 
deltadc9
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 2:52 am

Quoting Silentbob (Reply 7):
If it wasn't for the tons of cash annually handed to politicians by the oil industry, I honestly think that some in the government would be openly discussing heavily regulating oil/fuel prices and production. If the prices continue to go through the roof, based only on speculation and analyst opinions and not based on reality then regulation is something that needs to be considered.

How do you regulate something controlled by foreign parties? The US does not determine the price of a barrel of oil, those days are gone. Even OPEC has lost a portion of its control. We can make all the laws we want, but in the end the demand from countries who dont give a damn what we say affect it far more than anything we can do. This is 50% of the price of a gallon of gas almost completely out of our control.

What we can do is make it cheaper to refine on shore, eliminating the primary on shore excuse for high prices. Taxes wont go down on gas, so to me this is the low hanging fruit we need to concentrate on.
Dont take life too seriously because you will never get out of it alive - Bugs Bunny
 
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falstaff
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 2:53 am

The gas and electric companies should be regulated again. It seems like service sucks nowadays. When there is a big storm and power goes out it takes days for all the power to come back online. I never used to take that long. After deregulation they all cut employees to the point that service sucks. Big business pays less and the little guy is stuck paying the cost of the entire infrastructure.
My mug slaketh over on Falstaff N503
 
supa7E7
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 2:54 am

Heimlich at the ATA is a smart dude.

That said, we have been hearing this message for many years.

If we proved anything in 2005-2006, it is that airlines CAN handle massive runups in oil prices. So can passengers.

$100 oil would raise US air costs about 15% by my rough calcs. That means partly pricing actions, and partly slower growth. Some things would be parked:
* NW DC-9s
* some MD-80s
* some <60 seat RJs

... And that would be it. Life would go on at $100. Would be stressful but the demand that underpins air travel is very strong, stronger than recent alarmists thought when they imagined the fallout from $70 oil.
"Who's to say spaceships aren't fine art?" - Phil Lesh
 
planemaker
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 2:54 am

Quoting Falstaff (Reply 6):
Quoting 747LUVR (Reply 5):
I think that would equate to a world recession

Sure would. Fuel prices raise the cost of everything. The railroad and shipping companies would have to raise costs to cover the bills too. Trucks that carry everything will raise prices too. Nearly everything is moved on a truck at one period of time. The price goes up across the board. Companies will cut back to pay for added fuel costs and then salaries will stay the same or go down. We will spend more on energy and less on fun stuff and big ticket items. It is a downward spiral. People talk about alternative fuels, but many of those have huge infrastructure costs and environmental risks worse than oil.

This news is why EVERYONE should be supporting the proposed “Consumers Transportation and Energy Security Act of 2006.”

Contact your representative and let them know that you back this proposed bill... especially if you work in aviation... it could save your job and protect your income!

Link to copy of Bill proposal:
http://www.glennbeck.com/2006ads/Con...gy%20Security%20v%206-20%20_2_.pdf

Link to DoD 28-slide presentation:

Vision: DoD/ AT& L intends to catalyze commercial industry to produce
clean fuels for the military from secure domestic resources using
environmentally sensitive processes as a bridge to the future.
http://www.glennbeck.com/2006ads/2006harrison_barna.pdf

Link to B6's 16-slide presentation:

Consumers Transportation and Security Act of 2006
Strategic Vision for Energy Independence
http://www.glennbeck.com/2006ads/jbluctl.pdf

Link to thread about the Bill:
http://www.airliners.net/discussions...eneral_aviation/read.main/2946472/
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
HunUtazo
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 3:38 am

AMR - nwac


CAL - ual/f


LCC - fragments/u/d


LUV - dal/f
dude
 
carduelis
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 3:46 am

For those young enough to remember, there was a worldwide fuel crisis over 30 years ago.

Doubtless there were many then who felt that the airlines would collapse if the price increased. Heaven only knows what the extortionate price was in those days!

Life goes on, and there will always be survivors!

Airlines 'tremble' . . . ?

[Edited 2006-08-22 20:49:05]
Per Ardua ad Astra! ........ Honi Soit Qui Mal y Pense!
 
NWDC10
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 3:55 am

Quoting Falstaff (Reply 6):
We will spend more on energy

That's very true. I believe when higher energy costs come to play, it takes more money out of the "general economy" just to pay for energy/fuel. People may buy less food, clothing, may cut back and not eat out as much, many foreclosures on homes will occur etc.

Higher energy doesnt' actually add employment but decreases it. Many businesses will fold, not just airlines. If we want "more security", we need to be force to cut back and be totally independent from impoting oil from other countries. and that means the auto companies better get their a$$ in gear and make 40+ miles per gallon vehicles-not just a few but make all of them 40+ miles per gallon. Also we need to bring energy efficient diesel cars back like they are very popular in England. Jet engines need to be alot more fuel efficient than they alread are-more so than the 787 type engines.

Is this possible? yes. Will it take alot of work? yes but it will all be worth it.

Robert NWDC10
 
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 4:34 am

Quoting 747LUVR (Reply 5):
I shudder at the thought of $100/bbl of oil. UGH! I think that would equate to a world recession. IMO.

Higher energy costs aren't much fun for most people, but oil is currently, what, six times more expensive than it was seven years ago? Most industrial economies are running quite well right now. Even many airlines have managed to adapt. Why would a "mere" 40% increase at this point automatically equal recession?
New airplanes, new employees, low fares, all touchy-feely ... all of them are losers. -Gordon Bethune
 
Pope
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 5:52 am

Don't assume for certain that oil is headed for $100 (at least not in the short term). Here's an article a colleague sent me today that makes a pretty convincing argument that we're headed for $50 a barrel.

http://www.oilintel.com/newshome.cfm?news_id=533&action=showstory
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Ken777
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 6:31 am

$100 oil will be a reality some day - the only question is when. Petrol prices have increased 10 fold since I started driving (OK, I'm sort of old) and over the long term it will continue to rise. That is a problem for the airlines to plan for.

Mid to long term I believe that airlines will start looking at fleet management as a daily function. During a morning review of seats sold they will make a decision that using a 747 on a route in 2 days will be a better match to the seats sold than the 380, so they will use the 747. The 747 will be available as a 777/350-1000 is "under sold" and will be replaced with a 787-8, which is being replaced with a Y1/320RS. In other words, they will fly the plane that will be full, or nearly full, in place of a plane that is only 50-60% full.

This isn't an argument against the 380, or the 748i. It's an argument that the airlines (and their employees) will need to be able to respond very rapidly to actual sales for every flight. This level of response requires a more versatile fleet, but the point will come where the cost of fuel justifies that versatility.
 
HunUtazo
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 1:31 pm

Quoting Ken777 (Reply 17):
That is a problem for the airlines to plan for.

The airlines have already planned for it, it's called Consolidation. Airfares will continue their rise, capacity will be adjusted, not all folks traveling today will be able to afford it tomorrow, all constitiuencies have given, this is the last on the list and should begin to be worked by the spring of next year, or sooner..

Two maybe three very big American Air Carriers, and the loss of one, maybe more low cost carriers.

Consolidation changes everything.
dude
 
SInGAPORE_AIR
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 1:35 pm

Jet fuel closed at US$89.90 in Singapore yesterday.

Disgusting.
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PlanesNTrains
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 1:54 pm

Quoting Ken777 (Reply 17):
The 747 will be available as a 777/350-1000 is "under sold" and will be replaced with a 787-8, which is being replaced with a Y1/320RS. In other words, they will fly the plane that will be full, or nearly full, in place of a plane that is only 50-60% full.

Well then I think you'd need a lot of extra capacity somewhere in your fleet, because if you keep bumping down the size of aircraft, either you end up short a 50 seater and over a 500 seater (for example) and start cancelling numerous flights every day, or you have extra planes sitting around waiting for the right mission to fill.

For example:

Scheduled:

Flight 100 380
Flight 200 744
Flight 300 777
Flight 400 788
Flight 500 321
Flight 600 319
Flight 700 CRJ

If you replace the 380 with a 744, this is what happens:

Flight 100 744
Flight 200 777
Flight 300 788
Flight 400 321
Flight 500 319
Flight 600 CRJ
Flight 700 Cancelled

This leaves you with an A380 with nothing to do, and a short haul flight without an aircraft. This means you'll need extra aircraft to cover an existing schedule, which ties up huge amounts of capital. I don't know exactly where oil would have to be to make this economical, but I'd imagine it's a lot more than $100 a barrel, and at that point demand will drop anyways.

Quoting HunUtazo (Reply 12):
AMR - nwac


CAL - ual/f


LCC - fragments/u/d


LUV - dal/f

Well if you say it enough, after enough time has passed it will likely come true. But you've been saying it for a long time, and other than it being your opinion, there is nothing pre-ordained.

Unless you'd like to share your inside info.  Smile

Quoting YULWinterSkies (Reply 4):
Well, I raise 2 hypotheses here :

1. He is bluffing and WN is already prepared
2. He's a loser

They've done enormously well planning for the oil crisis of today - don't you think a bit of credit is deserved in his statements being potentially accurate? I mean, name an airline that planned better for the current crisis than WN?

In regards to your hypotheses, 1. is a given, inasmuch as they can plan for such an event, while 2. seems pulled out of your hat.

But hey, we're talking about WN here - what the heck do they know?

-Dave
-Dave
 
Ken777
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 2:50 pm

Quoting PlanesNTrains (Reply 20):
This leaves you with an A380 with nothing to do

If you were faced with this type of problem what would you do - fly the 380 or a smaller plane? While the 380 (or 744/8i) is sitting around a lot of airlines would be carrying out some level of maintenance - avoiding the need to pull it later. I believe that there will be more than VLAs that don't fly on low load days.

The other option is to consolidate two flights when possible to fill the plane.

While it would take additional planes, the additional planes would be at the smaller end of the range, as the shift would be downwards. That costs money, but flying too large a plane for the customer load isn't inexpensive either.

While consolidation may provide some benefits it will still be expensive to fly planes with a low pax load. The benefits of consolidation may be the additional smaller planes that can handle the down shift.

Airlines have some pretty sophisticated computer system for load and revenue management. I simply believe that they are going to need to have just as good, if not better, systems in place for daily fleet management that is integrated with their sales systems.
 
carduelis
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 3:18 pm

The first rule of ANY form of transportation is that there will be an inbalance of flow . . .

Which means that if you replace a large aircraft with a smaller one, then that aircraft will not be big enough to carry the reciprocal passengers on the return journey or vice versa . . . !

Nice idea, but you have to have a very broad outlook to do it practically . . . and also to handle variations of crew for aircraft different types!

Carduelis, former Member of the Chartered Institute of Transport
Per Ardua ad Astra! ........ Honi Soit Qui Mal y Pense!
 
PlanesNTrains
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RE: Airlines Tremble At Prospect Of $100/bbl

Wed Aug 23, 2006 4:01 pm

Quoting Ken777 (Reply 21):
If you were faced with this type of problem what would you do - fly the 380 or a smaller plane?

I really think it is more complex than our conversation. For example, maybe the city you are flying to does not have a crew in place qualified on a different aircraft, or perhaps doesn't have enough F/A's - or too many. Once you start randomly switching aircraft around (by random, I mean close to the day of departure), many things need to be addressed.

If you know that the day after tomorrow you are sending a 744 from NRT to LHR instead of an A380, then maybe today you need to send a 744 so that then you have the proper crew for the return. I think a better situation to serve as an example would be a carrier with the A318/319/320/321 or Boeing equivalent choosing to swap aircraft around as needed. Other than an F/A, there really is very little difference between the aircraft aside from capacity, and the difference in size isn't enough to require parking a plane for the day as a means of right-sizing the flight schedule.

I really have no argument with your point - I agree that airlines are going to need to be smarter about how they use their resources - i just felt that the example as given may not actually work as stated.

-Dave
-Dave
 
jdevora
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 1:04 am

Quoting Ken777 (Reply 21):
Quoting PlanesNTrains (Reply 20):
This leaves you with an A380 with nothing to do

If you were faced with this type of problem what would you do - fly the 380 or a smaller plane?

The problem is that a parked plane will cost you money as well (parking fees, lease...), so it is very unlikely that you have a 777 (for example) just "sitting arround" for replace the half full A380/B7478
 
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Revelation
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 2:29 am

Quoting Silentbob (Reply 7):
If it wasn't for the tons of cash annually handed to politicians by the oil industry, I honestly think that some in the government would be openly discussing heavily regulating oil/fuel prices and production. If the prices continue to go through the roof, based only on speculation and analyst opinions and not based on reality then regulation is something that needs to be considered.

Unfortunately the trend is going in the opposite direction. The current administration did not oppose the mergers of Exxon/Mobile and Texaco/Chevron. In the process, refineries were shut down, which drove prices and profits up in a big big way.

Quoting Supa7E7 (Reply 10):
If we proved anything in 2005-2006, it is that airlines CAN handle massive runups in oil prices. So can passengers.

I see your point, but on the personal scale, I've cut out a lot of leisure travel, mainly due to sticker shock on the airfare. Also at work, a lot more stuff is being done by audio and video conferencing, instead of by travelling.
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TVNWZ
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 2:42 am

Quoting YULWinterSkies (Reply 4):
Quoting NWDC10 (Thread starter):
Southwest CEO Gary Kelly discounts the likelihood of $100 oil.

Well, I raise 2 hypotheses here :

1. He is bluffing and WN is already prepared
2. He's a loser

Actually he is correct. The fundamentals do not call for this. But, greed and fear do. It is costing hardly more to produce and refine a barrel of oil than it did five years ago. The only difference today is speculation. The price difference today from three years ago is pure profit. Profit for the producers, oil companies and refiners. Remember, the profits oil company and refiners go by are percentages of cost. A 10% profit refining $50 barrel oil and a 10% profit refining $75 barrel of oil means the profit just went up 50%.
 
VEEREF
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 2:47 am

Quoting NorthwestEWR (Reply 2):
No, they would have to raise fare ASAP.


And actually sell their product at or above cost?
Nah, much easier to go to the employees and have them take more paycuts!

[Edited 2006-08-23 19:48:13]
Airplanes are cool. Aviation sucks.
 
dc10s4ever
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 3:00 am

Quoting Pope (Reply 16):
Don't assume for certain that oil is headed for $100 (at least not in the short term). Here's an article a colleague sent me today that makes a pretty convincing argument that we're headed for $50 a barrel.

I doubt we will EVER see $50 again. I dont even thing we will see $60 again. I think we will run in the $70-80 range for the next 6-12 months, then start up from there. Unless we have a big fall out with Iran, then $100 could be a reality VERY soon.
 
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Revelation
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 3:19 am

Quoting VEEREF (Reply 27):
And actually sell their product at or above cost?
Nah, much easier to go to the employees and have them take more paycuts!

They have to sell at the price of their lowest priced competitor, otherwise the employees will get 100% pay cuts instead of 40% pay cuts.

Quoting Dc10s4ever (Reply 28):
I doubt we will EVER see $50 again. I dont even thing we will see $60 again. I think we will run in the $70-80 range for the next 6-12 months, then start up from there. Unless we have a big fall out with Iran, then $100 could be a reality VERY soon.

I read the linked article http://www.oilintel.com/newshome.cfm?news_id=533&action=showstory and it makes a good case for $50 oil.

I think the Iran situation will stay in limbo for a long time. I think as much as the US and EU want Iran to curtail its nuclear activities, it still has Russia and China on its side. I think with time people will factor in the 'limbo' situation and prices will drop.
Inspiration, move me brightly!
 
VEEREF
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 5:25 am

Quoting Revelation (Reply 29):
They have to sell at the price of their lowest priced competitor, otherwise the employees will get 100% pay cuts instead of 40% pay cuts.

Or just hire on at Wal Mart and get pay raises.
Airplanes are cool. Aviation sucks.
 
planemaker
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 6:47 am

Quoting Revelation (Reply 29):
I read the linked article http://www.oilintel.com/newshome.cfm?news_id=533&action=showstory and it makes a good case for $50 oil.

Oh, without a doubt oil should be lower than $78/bbl. Following up on the oilintel article, here are some links to other interesting stories that pick on "speculators" for the current record prices:

Is a Futures Stampede Keeping Oil Prices High?
BY now, even a casual student of current affairs can reel off plenty of reasons for high oil prices: soaring demand, dwindling supplies, conflict in the Middle East and, most recently, the partial closing of an Alaskan oil field.
Ben P. Dell, an analyst at Sanford C. Bernstein & Company, would place another factor at the top of the list: the money that has been surging into the commodities futures markets. Mr. Dell published a report last month suggesting that a stampede of institutional investors, mainly pension funds, into commodities is actually the chief cause of the rise in oil prices, which he called “a bubble.”
http://www.nytimes.com/2006/08/13/bu...305600&en=7050948abb537805&ei=5070

Is There An Oil 'Bubble'?
Could there be an oil "bubble''? Well, yes. In early 2002 oil sold for roughly $20 a barrel; now it's close to $75. The main cause lies in tightening supply and demand -- and the fact that supply (as the present Middle East fighting reminds us) could be interrupted at any time. Old-fashioned speculation may also have played a role, and that raises the possibility of a bubble. But any bubble would be a peculiar beast, and if it burst and prices dropped significantly, we shouldn't delude ourselves into thinking that this might signal a new era of comfortable abundance.
http://www.washingtonpost.com/wp-dyn...le/2006/07/25/AR2006072501301.html

Oil at $100? It's No Longer a Pipe Dream
It may not take a supply disruption to send prices higher. Amid geopolitical uncertainty, the futures market might just do the job on its own.
http://www.businessweek.com/investor...tent/may2006/pi20060519_952692.htm

One thing that continues to stand out among all this discussion regarding the price of oil... is that the US does NOT currently control its energy future and hence national security. For this reason alone, the US must develop and implement a variety of intiatives, short-, mid- and long-term to ensure that the US is not dependent upon anyone for energy security.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
Glom
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 7:29 am

Maybe now's the time to invest in some nuclear turbofans. SYD-LHR non-stop and no need to refuel.
 
lijnden
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 8:09 am

Think creative:
Instead of trying to 'protect' oil resources in the middle east (Iran), Nigeria is maybe a better country to invade for oil. There are also huge reserves stored in tanks in The Netherlands ready for usage (actually it is the world's largest oil storage with an estimated reserve of about one year world usage). Make Holland the 51st state. Lift the embargo on Cuba and buy via Fidel Castro the oil of Venezuela.

Other resources are plutonium in South Africa, huge gas and oil deposits in the former USSR (Tajikistan, Siberia, Ukraine). One of the largest unused oil reserves around are just north of the border in Canada and Alaska. The oil reserves there are estimated to be bigger than those in the Middle East.
As for the airline industry in the next 5 years, the key-word is consolidate, fly more efficient (higher, slower), restructure ticket fares and take out the middle man. I think you will see a new industry standard imposed by governments that planes must be filled up for at least 35% or else will face a mandatory cancellation.
Be kind to animals! Next trip: ORF-ORD-NRT-IAH-ORF
 
Glom
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 8:28 am

Quoting Lijnden (Reply 33):
Other resources are plutonium in South Africa,

What plutonium?
 
EXAAUADL
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 8:57 am

well the good news is that at the begining of 2005, there was less than 1 million barrels per day of excess capacity. By the end of 2006, there will be 3 million barrels of excess capacity. By 2008 it will be back to 6 million where it was in the 1990s. If there is a global recession befroe tha ttime, the excess capacity will be even larger.

Quoting Dc10s4ever (Reply 34):
The real reason oil is so high is we have an oil man in the White House. Get that asshole Bush out of the office, oil prices will fall.

Care to explain the economics of that? BDS (Bush Derrangement Syndrome)is rarely results in rational discussion.

Quoting NWDC10 (Reply 14):
we need to be force to cut back and be totally independent from impoting oil from other countries.

Energy independence is what Senator Moynahan of NY called "Boob Bait for the Bubbas" Sounds great every politician recites it. It is also false.

Canada imports no oil at all. All Canadian oil consumed comes from Canada. Yet Canada is subject to price spikes just as the US is. When Katrina hit in 2005, gasoline spiked to about $5 per gallon in Canada. Oil is fungible. There is no such thing as being independent from events that affect price.

Quoting Supa7E7 (Reply 10):
Heimlich at the ATA is a smart dude.

I know him

Quoting 747LUVR (Reply 5):
I shudder at the thought of $100/bbl of oil. UGH! I think that would equate to a world recession. I

It depends. If it is $100 due to high demand, then no(high demand will allow airlines to raise fares and fill planes). If it $100 due to a supply shock, yes it is quite possible. The % change from $75 to $100 is less than the % change from $50 to $75.
 
art
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 9:17 am

Quoting Carduelis (Reply 13):
For those young enough to remember, there was a worldwide fuel crisis over 30 years ago.

Doubtless there were many then who felt that the airlines would collapse if the price increased. Heaven only knows what the extortionate price was in those days!

Went up from $1.80 per barrel to about $5 per barrel more or less overnight, a 200%+ increase. That produced a world economic depression (not including the oil exporting countries, of course). A similar 200%+ increase has taken place in the last year or so but the effect has been comparatively small.
 
planemaker
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 9:17 am

Quoting EXAAUADL (Reply 36):
Canada imports no oil at all. All Canadian oil consumed comes from Canada.

Where did you drum that fact up? It just isn't so.

Canada imports 927,000 barrels per day of crude oil. A lot for only 30 million people... and an industry that "produces 22% of North America’s crude oil and natural gas but accounts for only 10% of its consumption" (source CAPP).

Quoting EXAAUADL (Reply 36):
Energy independence is what Senator Moynahan of NY called "Boob Bait for the Bubbas" Sounds great every politician recites it. It is also false.

No. it is not false. Using your example of Canada, that country is "energy independent" because the vast majority of its energy is produced domestically... unlike the US where supply is at the whim of hostile or rival nations... 65% of US crude oil consumption is imported, and 75% of that comes from "unstable governments" (source EIA).
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
ltbewr
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RE: Airlines Tremble At Prospect Of $100/bbl

Thu Aug 24, 2006 10:36 am

One of current factors for $70-77 bbl oil today is a 'war premium', due to the continuing war in Iraq and with the most recent spike due to the Israeli war in Lebanon against Hezbolah. That probably adds $10-12/bbl.
What could punch oil prices to $100/bbl in the next 2-3 years, would be either a major terror attack of ships or dock facilities in the Persian Gulf, or destruction of a significant part of Saudi production facilities. That is a very real risk given the politics and situation as to terror in the region. Even then it would probably last several months, then prices would most probably settle down to $70-75.
 
EXAAUADL
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 12:23 am

Quoting Planemaker (Reply 38):
Where did you drum that fact up? It just isn't so

What I should say is that Canada certainly produces more oil than it consumes. I suspect Canada then imports light sweet crude as Alberta is mostly Heavy Sour.

But Ill stand by my claim that there is no such thing as energy independence because oil is a fungible commodity. Middle Eastern and venezuela countries mostly subsidize gasoline to make their citizens happy.
 
planemaker
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 1:10 am

Quoting EXAAUADL (Reply 40):
But Ill stand by my claim that there is no such thing as energy independence because oil is a fungible commodity.

You are mistaking supply independence and price independence, though the two are obviously related.

The US should aim for energy supply independence, which for national security reasons should be done ASAP. Then, with energy supply independence comes price independence. BTW, Sweden is aiming to be "oil free" before 2020.

Quoting EXAAUADL (Reply 40):
Middle Eastern and venezuela countries mostly subsidize gasoline to make their citizens happy.

No, they don't "subsidize" their gasoline because the cost of production is still lower than the selling price. The correct statement is that they don't pay world prices prices for their gasoline.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
deltadc9
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 1:27 am

Quoting EXAAUADL (Reply 40):
But Ill stand by my claim that there is no such thing as energy independence because oil is a fungible commodity. Middle Eastern and venezuela countries mostly subsidize gasoline to make their citizens happy.

I think you are absolutely correct.
Dont take life too seriously because you will never get out of it alive - Bugs Bunny
 
Flyboy14295
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 1:33 am

Think about the impact on car fuel too. That would send prices skyrocketing. and not to mention the fact that fule is a non-expendable source.
Greetings from New York. "Take It to the limit." -Eagles
 
FlyDeltaJets87
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 1:37 am

Quoting Falstaff (Reply 9):
The gas and electric companies should be regulated again. It seems like service sucks nowadays. When there is a big storm and power goes out it takes days for all the power to come back online. I never used to take that long. After deregulation they all cut employees to the point that service sucks. Big business pays less and the little guy is stuck paying the cost of the entire infrastructure.

Oh, you'll still pay the same price for energy. It's just a matter of where you'll pay it to. If the industry becomes regulated and is funded through tax dollars, the total on your energy bill may drop, but the total on your tax statement will go up.
"Let's Roll"- Todd Beamer, United Airlines Flight 93, Sept. 11, 2001
 
planemaker
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 2:49 am

Quoting DeltaDC9 (Reply 42):
Quoting EXAAUADL (Reply 40):
But Ill stand by my claim that there is no such thing as energy independence because oil is a fungible commodity. Middle Eastern and venezuela countries mostly subsidize gasoline to make their citizens happy.

I think you are absolutely correct.

Out of curiousity, based on what?
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
deltadc9
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Joined: Fri Apr 14, 2006 10:00 pm

RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 3:16 am

Quoting Planemaker (Reply 45):
Out of curiousity, based on what?

A purely economics point of view. Oil is a commodity, and if you "sell it to yourself" at a discount you are still buying it at market and burning the money you do not charge for it. The cost is real.

The US actually exports oil, and turns around and imports other types in its place. Even if we produced domestically every barrel we need, we would still be forced to participate in the global market and our prices would still be dictated by it because if the going rate is not fetched on shore, it would be off shore and no one produced all the types they need because of the the diverse geology of the planet.
Dont take life too seriously because you will never get out of it alive - Bugs Bunny
 
planemaker
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 3:48 am

Quoting DeltaDC9 (Reply 46):
you are still buying it at market

The market is exactly what you are not taking into consideration.

If the US were to become energy independent then the price of oil comes down for the many reasons already ennumerated in the links to various articles in this thread.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
zvezda
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 4:38 am

Quoting Alessandro (Reply 1):
I doubt it as well, but it would mean that lot of airlines had to upgrade their
airplanes ASAP.

 checkmark Yes, the higher the price of jet fuel, the more attractive it is to buy newer, more fuel efficient aircraft.

Quoting FlyDeltaJets87 (Reply 44):
Oh, you'll still pay the same price for energy. It's just a matter of where you'll pay it to. If the industry becomes regulated and is funded through tax dollars, the total on your energy bill may drop, but the total on your tax statement will go up.

Actually, we would pay more for energy if government were to regulate it because of the enormous overhead in bureaucracy.
 
FlyDeltaJets87
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 4:45 am

Quoting Zvezda (Reply 48):
Actually, we would pay more for energy if government were to regulate it because of the enormous overhead in bureaucracy

Hehe, nice to see someone gets it. Just like healthcare: "If you think health care is expensive now, wait until you see what it costs when it's free."-PJ O'Rourke. Same principle for any form of government regulation.
"Let's Roll"- Todd Beamer, United Airlines Flight 93, Sept. 11, 2001
 
planemaker
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RE: Airlines Tremble At Prospect Of $100/bbl

Fri Aug 25, 2006 5:21 am

Quoting FlyDeltaJets87 (Reply 49):
Hehe, nice to see someone gets it. Just like healthcare: "If you think health care is expensive now, wait until you see what it costs when it's free."-PJ O'Rourke. Same principle for any form of government regulation.

Not so. FYI, energy is already regulated, directly and indirectly, and for the most part for corporate interests via their lobbies.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein

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