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MohawkWeekend
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Jet Fuel Prices this Summer

Sat May 08, 2021 2:11 pm

Having worked in the oil industry and been involved in aviation too, I've been watching with a retired guy's interest some troubling recent developments -

"U.S.’s Biggest Gasoline Pipeline Halted After Cyber-Attack" - this morning on Bloomberg

"Gasoline Prices Set To Soar This Summer" - Oil Price.com

"Gas shortages predicted this summer" - CNN

"Biden poised to halt new fossil fuel leasing on federal land and water Wednesday" - Washington Post

I was a teenager in the 70's and remember what happened to aviation back then when fuel was scarce and doubled in price. I like to see what A.netters think.
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    smokeybandit
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    Re: Jet Fuel Prices this Summer

    Sat May 08, 2021 3:13 pm

    Shortages are largely expected due to lack of truck drivers in the supply chain not due to lack of gas. It's tough to find people that actually want to work right now.
     
    MIflyer12
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    Re: Jet Fuel Prices this Summer

    Sat May 08, 2021 3:19 pm

    You're putting together some unrelated items and pretending they make a picture puzzle.

    The pipeline shutdown will end quickly - days, not weeks or months.

    The angst over summer gasoline prices is related to number of delivery drivers, not quantity available from refineries. How many of the nation's top 20 airports get their fuel by truck?

    Stopping new fossil fuel leasing on federal land doesn't shut down existing production. There are lots of leases held by firms where production hasn't even started. Only about 1/4 of oil production is from U.S. federal lands, anyway. This shutdown has zero immediate impact on production.
     
    MohawkWeekend
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    Re: Jet Fuel Prices this Summer

    Sat May 08, 2021 4:47 pm

    You may be right but I have to run out and by some lumber before it goes up 25% again.
    Never underestimate the power of oil traders to run hard on news. They were the smartest people at the oil major I worked for. They would sell their souls to get a bigger arbitrage.

    I am suprised that the news that someone (or country) may have hacked the largest US pipeline hasn't made more headlines.

    Colonial Pipeline -the company transports 2.5 million barrels per day of gasoline, diesel, jet fuel and other refined products through 5,500 miles (8,850 km) of pipelines. Colonial Pipeline says it transports 45% of East Coast fuel supply.
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      Tiredofhumanity
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      Re: Jet Fuel Prices this Summer

      Sat May 08, 2021 9:28 pm

      MohawkWeekend wrote:
      You may be right but I have to run out and by some lumber before it goes up 25% again.
      Never underestimate the power of oil traders to run hard on news. They were the smartest people at the oil major I worked for. They would sell their souls to get a bigger arbitrage.

      I am suprised that the news that someone (or country) may have hacked the largest US pipeline hasn't made more headlines.

      Colonial Pipeline -the company transports 2.5 million barrels per day of gasoline, diesel, jet fuel and other refined products through 5,500 miles (8,850 km) of pipelines. Colonial Pipeline says it transports 45% of East Coast fuel supply.


      Never letting a good crisis go to waste at the expense of others is the Wall Street way...

      If the refineries are still running at full capacity, and able to ship Jet A without issue to the rest of the country, would the spot prices really skyrocket? This is assuming they don't have to pull back production due to storage filling up.
       
      CMHSRQ
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      Re: Jet Fuel Prices this Summer

      Sat May 08, 2021 9:38 pm

      As a seller of jet fuel and avgas I can say that shortages in both supply and drivers are very real and posing a significant problem. Refineries aren’t producing as much jet because the margins are small. Diesel is the big winner now. So allocation is a problem, follow that up with a lack of truck drivers and you have a serious supply problem.
      The voice of moderation
       
      MohawkWeekend
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      Re: Jet Fuel Prices this Summer

      Sat May 08, 2021 10:17 pm

      Tiredofhumanity wrote:
      MohawkWeekend wrote:
      You may be right but I have to run out and by some lumber before it goes up 25% again.
      Never underestimate the power of oil traders to run hard on news. They were the smartest people at the oil major I worked for. They would sell their souls to get a bigger arbitrage.

      I am suprised that the news that someone (or country) may have hacked the largest US pipeline hasn't made more headlines.

      Colonial Pipeline -the company transports 2.5 million barrels per day of gasoline, diesel, jet fuel and other refined products through 5,500 miles (8,850 km) of pipelines. Colonial Pipeline says it transports 45% of East Coast fuel supply.


      Never letting a good crisis go to waste at the expense of others is the Wall Street way...

      If the refineries are still running at full capacity, and able to ship Jet A without issue to the rest of the country, would the spot prices really skyrocket? This is assuming they don't have to pull back production due to storage filling up.


      Storage could be an issue in Texas and Chushing if they struggle with getting the line up. I guess it started Friday.
      But getting back to prices, we are a quit a away from the highs of 2012 which was $3.17 a gallon https://www.statista.com/statistics/197 ... ince-2004/. But it's got to be adding to the pressure on management.
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        MohawkWeekend
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        Re: Jet Fuel Prices this Summer

        Sun May 09, 2021 7:36 am

        I remember two things when prices doubled in 1973 - my instructor livid that this would impact flying his C-177 Cardinal (the most beautiful single engine IMO) and pictures of parked Pan Am 707's.

        Delta saw it's vulnerability to supply issues. They bought an expensive insurance policy ( a refinery) which turned out they really didn't need. But the game is changing - pipelines being hacked, new pipelines being fought and then cancelled, and the beginning of Govt pressure to wean the world away from fossil fuel. Couple that with rapidly increasing inflation of all materials.

        Folks - this is really a big deal.
        Cyber attack shuts down U.S. fuel pipeline ‘jugular,’ Biden briefed https://www.reuters.com/technology/colo ... 021-05-08/
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          slcdeltarumd11
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          Re: Jet Fuel Prices this Summer

          Sun May 09, 2021 7:41 am

          I don't see fuel prices being an issue. Those companies are just not paying enough for how tough a job that is. The market will correct itself. The problem for airlines will be the lack of valuable business travel and long haul international. Replacing it with domestic leisure is great but won't pull in the same kind of money. Ua and as have too many wide-bodies and expenses for that setup.
           
          frmrCapCadet
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          Re: Jet Fuel Prices this Summer

          Sun May 09, 2021 1:20 pm

          Starting in a few years electric ground vehicles will begin to destroy demand for gasoline. That 'gas' will be available for planes. The problem, referred to in an earlier post, is that refineries will have to figure out how to make a larger ratio of aviation fuel. Personally, I have long felt that some carbon taxes should be applied to aviation fuel, and that sector should be allowed to use fossil fuel as long as they need.
          Buffet: the airline business...has eaten up capital...like..no other (business)
           
          MohawkWeekend
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          Re: Jet Fuel Prices this Summer

          Sun May 09, 2021 2:52 pm

          The most pressing issue will be how airlines handle a possible price spike now when they are in a weak position. Airlines don't have the cash to buy hedges so they are vulnerable.

          Increasing inflation in all materials coupled with pending tax hike. And a sophisticated cyber attack on our infrastructure.

          As one of my generation's spokesmen John "Bluto" Blutarsky said: My advice to you is to start drinking heavily.
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            jfklganyc
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            Re: Jet Fuel Prices this Summer

            Sun May 09, 2021 3:14 pm

            frmrCapCadet wrote:
            Starting in a few years electric ground vehicles will begin to destroy demand for gasoline. That 'gas' will be available for planes. The problem, referred to in an earlier post, is that refineries will have to figure out how to make a larger ratio of aviation fuel. Personally, I have long felt that some carbon taxes should be applied to aviation fuel, and that sector should be allowed to use fossil fuel as long as they need.



            Your post reads like an Epcot center ride in 1989. “By the year 2000...”

            Hasnt happened yet. Not even close to happening despite the press releases.
             
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            jfklganyc
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            Re: Jet Fuel Prices this Summer

            Sun May 09, 2021 3:21 pm

            As for this summer, Flying is way down around the world. Flying domestically is back within the US...But that is the exception to the rule. Airlines like Lufthansa or British Airways won’t be flying a fraction of their normal schedule anytime soon.

            That should relieve pressure on prices
             
            MohawkWeekend
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            Re: Jet Fuel Prices this Summer

            Sun May 09, 2021 3:41 pm

            That helps but diesel and marine diesel demand is way up. And as CMHSRQ posted above refiners will make the product with the highest margin(which isn't jet fuel). Now if Jet goes up to match those other distillates, the product will be there but at a higher cost. As long as they don't start hacking refineries.
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              lightsaber
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              Re: Jet Fuel Prices this Summer

              Sun May 09, 2021 3:56 pm

              smokeybandit wrote:
              Shortages are largely expected due to lack of truck drivers in the supply chain not due to lack of gas. It's tough to find people that actually want to work right now.

              That has to end. People don't realize how bad taxes must get to pay the debts. Time to get back to work, there isn't a reason for adults to stay home anymore (plenty of vaccine).

              CMHSRQ wrote:
              As a seller of jet fuel and avgas I can say that shortages in both supply and drivers are very real and posing a significant problem. Refineries aren’t producing as much jet because the margins are small. Diesel is the big winner now. So allocation is a problem, follow that up with a lack of truck drivers and you have a serious supply problem.


              Refineries will be operated as a business. They are more a constant flow (not quite, they do batch process) and if demand was low, they do maintenance or other work to cut costs until prices are high enough to justify switching production. I think we'll have a jet fuel shortage this summer as with most oil products. You cannot go from half usage (approximately) to full production quickly.

              Lightsaber
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              twinotter
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              Re: Jet Fuel Prices this Summer

              Sun May 09, 2021 7:49 pm

              MohawkWeekend wrote:
              They bought an expensive insurance policy ( a refinery) which turned out they really didn't need.


              Delta has lost over $200 million in the last six months thanks to its refinery. In other words, Trainer added 23 cents per gallon to Delta's fuel cost in the last quarter of 2020. That's a heck of an "insurance policy"!
               
              MohawkWeekend
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              Re: Jet Fuel Prices this Summer

              Sun May 09, 2021 9:24 pm

              But Delta's purchase shows that fuel costs were front and center for airline brain trusts not that long ago (recall SWA's successful fuel hedging) Now they are going into potential higher fuel prices with higher debt, and higher labor costs. Monday will be interesting in the commodity markets if they can't get that pipeline going.
              Whoever did the hacking was no amateur. It begs the question - what is safe? Electric grid, ATC, refineries? What happens if we find it originated somewhere where folks don't like us?

              Looked up on Indeed.com and found the following hourly wage rate for fuel delivery drivers-
              $29.84 per hour
              47% Above national average
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                santi319
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                Re: Jet Fuel Prices this Summer

                Sun May 09, 2021 11:57 pm

                I think you are comparing the 70s dependency on fuel vs 2021…. While we have a bit more population, alternatives keep making us more independent from fossil fuels.
                 
                MohawkWeekend
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                Re: Jet Fuel Prices this Summer

                Mon May 10, 2021 1:25 am

                Barring a economic downturn, world oil consumption is projected to grow over the next few years. Since there is no current alternative to oil based aviation fuels, airlines will be at the risk of price shocks. Oil can be exported from the US now, so pricing is more tied to what the rest of the world pays.

                Oil consumption will remain high until the mass adoption of electric motor vehicles later in this decade. Or another economic shock occurs.
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                  frmrCapCadet
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                  Re: Jet Fuel Prices this Summer

                  Mon May 10, 2021 1:57 pm

                  Probably before 2026 EVs will result in 2 MBD drop in expected oil demand. I don't expect oil demand from growing economies to increase demand as much as some predicters in the industry expect. Economic output per unit of energy consumption has been increasing for decades. Short term increases in oil, sure. Long term demand is dropping. If nothing else, low income countries have more pressing things to do with their limited budgets than send it off to Saud Arabia or Iraq. Look at the valuation of petroleum companies, it reveals the future of those companies. Oddly, Buffet found some oil stocks undervalued enough to make a big buy.
                  Buffet: the airline business...has eaten up capital...like..no other (business)
                   
                  Exeiowa
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                  Re: Jet Fuel Prices this Summer

                  Mon May 10, 2021 7:00 pm

                  Higher fuel costs might effect the balance of which parts of an under utilized fleet will be used, switching from the older payed off and less efficient, to the newer more efficient frames. Be interesting to see what price causes the preference flip
                   
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                  lightsaber
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                  Re: Jet Fuel Prices this Summer

                  Mon May 10, 2021 9:15 pm

                  Exeiowa wrote:
                  Higher fuel costs might effect the balance of which parts of an under utilized fleet will be used, switching from the older payed off and less efficient, to the newer more efficient frames. Be interesting to see what price causes the preference flip

                  There might not be the cash for engine overhauls or airframe maintenance. We might just see cut service.

                  Lightsaber
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                  MohawkWeekend
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                  Re: Jet Fuel Prices this Summer

                  Mon May 10, 2021 9:37 pm

                  Lightsaber is correct the key will be cash flow. Other threads have discussed the industry"s return to profitability. What happens if Jet goes up 10 or 20 percent from here?
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                    MohawkWeekend
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                    Re: Jet Fuel Prices this Summer

                    Tue May 11, 2021 1:41 am

                    Maybe we should merge this thread with the new one about Fuel Shortages in CLT.

                    Tankering fuel and prices rising. Yikes. Might not last long assuming hackers are paid the ransom or the good guys can break the bug. But the demand for transportation fuels is increasing - so prices are rising. United can't go out an buy a Tesla Jet yet.
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                      Okie
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                      Re: Jet Fuel Prices this Summer

                      Tue May 11, 2021 1:56 am

                      MohawkWeekend wrote:
                      Tankering fuel and prices rising. Yikes. Might not last long assuming hackers are paid the ransom or the good guys can break the bug. But the demand for transportation fuels is increasing - so prices are rising. United can't go out an buy a Tesla Jet yet


                      Please tell exactly how you would think that hackers or enemies can't disrupt the electrical grid the same as a pipeline making an electrical powered anything basically useless.

                      Okie
                       
                      NLINK
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                      Re: Jet Fuel Prices this Summer

                      Tue May 11, 2021 2:12 am

                      This was more than likely a preventable hack with the correctly designed network. Unfortunately companies are usually reactive in IT and not proactive.
                       
                      MohawkWeekend
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                      Re: Jet Fuel Prices this Summer

                      Tue May 11, 2021 10:42 am

                      Okie wrote:
                      MohawkWeekend wrote:
                      Tankering fuel and prices rising. Yikes. Might not last long assuming hackers are paid the ransom or the good guys can break the bug. But the demand for transportation fuels is increasing - so prices are rising. United can't go out an buy a Tesla Jet yet


                      Please tell exactly how you would think that hackers or enemies can't disrupt the electrical grid the same as a pipeline making an electrical powered anything basically useless.

                      Okie


                      You are right that collapsing the electric grid would be disastrous.

                      I started this thread to discuss what rising fuel prices would do to airline operations and profitability. I listed 4 or 5 bylines from news reports. Only one of which was this hack. But right now, demand for oil derived fuels is increasing a lot as the economy recovers. Of all the transport industries, aviation is most tied to oil derived jet fuel. Trains and ships can run on methanol, CNG/LNG or batteries. Cars and trucks on electricity, compressed nat gas, propane. Couple that with Governments who have all fossil fuels in their cross hairs- expect taxes soon and regulations that squeeze the production and delivery of liquid or gas fossil fuels.

                      My reference to Tesla was to point out that airlines for the next few years don't have options.
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                        MohawkWeekend
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                        Re: Jet Fuel Prices this Summer

                        Tue May 11, 2021 12:29 pm

                        Pictures of gas lines in North Carolina. Hopefully Governor of Michigan won't shut down Line 5 on Friday and spread those lines to Midwest and Ontario. Refineries in Sarnia, Detroit and Toledo make a lot of the midwest's jet fuel.
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                          lightsaber
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                          Re: Jet Fuel Prices this Summer

                          Tue May 11, 2021 3:13 pm

                          Please limit discussion to on topic.
                          7 months without TV. The best decision of my life.
                           
                          MohawkWeekend
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                          Re: Jet Fuel Prices this Summer

                          Tue May 11, 2021 4:54 pm

                          "Looming showdown as Michigan governor orders Canadian pipeline shut down" - https://www.washingtonpost.com/world/20 ... r-michigan

                          Line 5 provides all of the crude oil that Sarnia refineries use to make jet fuel for Toronto. Marathon Oil Refinery in Detroit and 2 refineries in Toledo rely on it for their crude supplies too. Will impact jet production significantly.

                          IMO - folks who work in aviation need to have their voices heard as the Government makes decisions on oil exploration, production and transportation(e.g. pipelines). For the foreseeable future, you need oil.
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                            MohawkWeekend
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                            Re: Jet Fuel Prices this Summer

                            Tue May 11, 2021 9:50 pm

                            I am missing something? I see all kinds of threads on Airliners.net about expansion plans, adding flights etc. We've hardly had any comments on this thread.

                            No one is investing in refineries, you can't build any new pipelines, they are adding enough regulations to make drilling for oil prohibitively expensive, and a public and government perception that fossil fuels are evil. And airlines are going to need that fuel to be available and available at a reasonable price for years to come.

                            Those who cannot remember the past are condemned to repeat it.”–George Santayana, The Life of Reason, 1905.

                            Maybe I'm just getting old
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                              eal
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                              Re: Jet Fuel Prices this Summer

                              Tue May 11, 2021 11:05 pm

                              The Malthusian predictions on here aren't grounded in reality.

                              The last thing the Biden administration wants is fuel lines, Colonial has said the pipeline should be fully operational by end of week. Most of the shortages we're seeing now are based on panic buying due to domestic media frenzy given that nothing else of interest to American audiences is on tv.

                              Regarding the shortage of truck drivers, it's a bit of a stretch to blame this on unemployment benefits. Trucker drivers operated through the whole pandemic as essential workers. This has to do with the industry at large, gaining new truck drivers is the difficult bit because a) you need to certify them and b) the job is set to be obsolete in 10 years. Not to mention that most truck driving is contractual, so who's gonna invest in a big rig that's useless in 10 years? It's a difficult situation that will probably accelerate the introduction of automated tech in the sector and that's just the way the world goes.

                              Regarding regulations on fossil fuels, you all do realize that aviation is unique in that it is the one GHG emitting industry where alternative energy solutions are a way off? Everything else can begin being moved over to green energy, which is a better long term solution anywho. It's been a little bit over 100 days since the Biden administration came into office, their desired regulatory agenda has not been able to be fully adopted. Especially considering the bulk of the green energy transition is in the infrastructure bill which hasn't been approved. Every time someone has to pay a cent more for gas people claim communism around the corner.

                              As someone astutely mentioned before, producers adjusted to low demand brought about by the pandemic. They need to adjust back now. Luckily, as also mentioned, there's no shortage of fuel-this is all a transportation issue. Iran and Iraq are not at war, this is a demand shock not a supply shock. It is not 1970, it is 2021 and the world is a new place.
                               
                              Tiredofhumanity
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                              Re: Jet Fuel Prices this Summer

                              Wed May 12, 2021 1:15 am

                              eal wrote:
                              The Malthusian predictions on here aren't grounded in reality.

                              The last thing the Biden administration wants is fuel lines, Colonial has said the pipeline should be fully operational by end of week. Most of the shortages we're seeing now are based on panic buying due to domestic media frenzy given that nothing else of interest to American audiences is on tv.

                              Regarding the shortage of truck drivers, it's a bit of a stretch to blame this on unemployment benefits. Trucker drivers operated through the whole pandemic as essential workers. This has to do with the industry at large, gaining new truck drivers is the difficult bit because a) you need to certify them and b) the job is set to be obsolete in 10 years. Not to mention that most truck driving is contractual, so who's gonna invest in a big rig that's useless in 10 years? It's a difficult situation that will probably accelerate the introduction of automated tech in the sector and that's just the way the world goes.

                              Regarding regulations on fossil fuels, you all do realize that aviation is unique in that it is the one GHG emitting industry where alternative energy solutions are a way off? Everything else can begin being moved over to green energy, which is a better long term solution anywho. It's been a little bit over 100 days since the Biden administration came into office, their desired regulatory agenda has not been able to be fully adopted. Especially considering the bulk of the green energy transition is in the infrastructure bill which hasn't been approved. Every time someone has to pay a cent more for gas people claim communism around the corner.

                              As someone astutely mentioned before, producers adjusted to low demand brought about by the pandemic. They need to adjust back now. Luckily, as also mentioned, there's no shortage of fuel-this is all a transportation issue. Iran and Iraq are not at war, this is a demand shock not a supply shock. It is not 1970, it is 2021 and the world is a new place.


                              Another thing to consider is that the major shale\Permian producers are purposely reigning in spending on new US domestic projects.

                              Many are using this time to pay off debts, but for the most part it's from Wall Street pressure to maximize returns. Then you have OPEC+ market manipulation which explains itself, but I guess the point is, the Democrats and environmental lobby are but one small player in this whole thing.
                               
                              MohawkWeekend
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                              Re: Jet Fuel Prices this Summer

                              Wed May 12, 2021 1:40 am

                              eal wrote:
                              The Malthusian predictions on here aren't grounded in reality.

                              The last thing the Biden administration wants is fuel lines, Colonial has said the pipeline should be fully operational by end of week. Most of the shortages we're seeing now are based on panic buying due to domestic media frenzy given that nothing else of interest to American audiences is on tv.

                              Regarding the shortage of truck drivers, it's a bit of a stretch to blame this on unemployment benefits. Trucker drivers operated through the whole pandemic as essential workers. This has to do with the industry at large, gaining new truck drivers is the difficult bit because a) you need to certify them and b) the job is set to be obsolete in 10 years. Not to mention that most truck driving is contractual, so who's gonna invest in a big rig that's useless in 10 years? It's a difficult situation that will probably accelerate the introduction of automated tech in the sector and that's just the way the world goes.

                              Regarding regulations on fossil fuels, you all do realize that aviation is unique in that it is the one GHG emitting industry where alternative energy solutions are a way off? Everything else can begin being moved over to green energy, which is a better long term solution anywho. It's been a little bit over 100 days since the Biden administration came into office, their desired regulatory agenda has not been able to be fully adopted. Especially considering the bulk of the green energy transition is in the infrastructure bill which hasn't been approved. Every time someone has to pay a cent more for gas people claim communism around the corner.

                              As someone astutely mentioned before, producers adjusted to low demand brought about by the pandemic. They need to adjust back now. Luckily, as also mentioned, there's no shortage of fuel-this is all a transportation issue. Iran and Iraq are not at war, this is a demand shock not a supply shock. It is not 1970, it is 2021 and the world is a new place.


                              I hope you are right. I keep coming back though to the near term i.e. the next 18 months. Can all the airlines in their present financial condition survive $2.25 jet fuel? We all hope that a Black Swan doesn't cause that number off by alot.
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                                DaCubbyBearBar
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                                Re: Jet Fuel Prices this Summer

                                Wed May 12, 2021 8:20 am

                                My thoughts go AVELO and BRREZE. Can they survive if fuel hangs in the $2.30-$2.50 range for 2-3 months? Or the ExpressJet restart? Aviation fuel prices should not really be affected by the lack of truck drivers. A 10,000 gallon tanker truck is enough to fill only something like 4-5 planes, so that avgas has to come via pipeline. But a lack of avgas would be very bad! Everybody needs it to get off the ground....thinking everyone is going to wanting all of their NEO’s and MAX’s suddenly
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                                MohawkWeekend
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                                Re: Jet Fuel Prices this Summer

                                Wed May 12, 2021 11:05 am

                                I think Breeze (and most of the other ULCCs) will be the least impacted. The other airlines have added tonnes of debt and have much higher labor costs (pay, benefits and work rules). IMO fuel could be the third strike for some carriers.
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                                  FluidFlow
                                  Posts: 1040
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 11:20 am

                                  MohawkWeekend wrote:
                                  I think Breeze (and most of the other ULCCs) will be the least impacted. The other airlines have added tonnes of debt and have much higher labor costs (pay, benefits and work rules). IMO fuel could be the third strike for some carriers.


                                  I agree, ULCCs are well positioned even in high fuel price markets. Every airline will have to pass on fuel prices so if ticket prices rise everywhere ULCCs are still the cheapest. Also ULCCs tend to fly full aircraft due to their business model so the increase is spread over more sold seats, while legacies tend to fly routes to provide connections even if they cant fill the aircraft. On top of that when long haul flying will pick up, but not demand there will be a lot of red ink on the balance sheet if the fuel prices are high.
                                   
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                                  lightsaber
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 1:03 pm

                                  MohawkWeekend wrote:
                                  eal wrote:
                                  The Malthusian predictions on here aren't grounded in reality.

                                  The last thing the Biden administration wants is fuel lines, Colonial has said the pipeline should be fully operational by end of week. Most of the shortages we're seeing now are based on panic buying due to domestic media frenzy given that nothing else of interest to American audiences is on tv.

                                  Regarding the shortage of truck drivers, it's a bit of a stretch to blame this on unemployment benefits. Trucker drivers operated through the whole pandemic as essential workers. This has to do with the industry at large, gaining new truck drivers is the difficult bit because a) you need to certify them and b) the job is set to be obsolete in 10 years. Not to mention that most truck driving is contractual, so who's gonna invest in a big rig that's useless in 10 years? It's a difficult situation that will probably accelerate the introduction of automated tech in the sector and that's just the way the world goes.

                                  Regarding regulations on fossil fuels, you all do realize that aviation is unique in that it is the one GHG emitting industry where alternative energy solutions are a way off? Everything else can begin being moved over to green energy, which is a better long term solution anywho. It's been a little bit over 100 days since the Biden administration came into office, their desired regulatory agenda has not been able to be fully adopted. Especially considering the bulk of the green energy transition is in the infrastructure bill which hasn't been approved. Every time someone has to pay a cent more for gas people claim communism around the corner.

                                  As someone astutely mentioned before, producers adjusted to low demand brought about by the pandemic. They need to adjust back now. Luckily, as also mentioned, there's no shortage of fuel-this is all a transportation issue. Iran and Iraq are not at war, this is a demand shock not a supply shock. It is not 1970, it is 2021 and the world is a new place.


                                  I hope you are right. I keep coming back though to the near term i.e. the next 18 months. Can all the airlines in their present financial condition survive $2.25 jet fuel? We all hope that a Black Swan doesn't cause that number off by alot.
                                  While airlines want to pocket the difference, prices must rise to hire back the people who worked oil before the pandemic.

                                  e.g., one of my friends works aerospace, oil, or medical engineering depending on who pays the best. He has worked insane hours on vaccine production for the pandemic. The hours are being cut, but the pay is still good. He'll work pharma until oil tempts him back (it is unlikely he'll work aerospace again, just by who pays what per hour).

                                  I think oil will be pricey in coming years.

                                  Lightsaber
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                                  Spacepope
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 1:50 pm

                                  lightsaber wrote:
                                  I think oil will be pricey in coming years.

                                  Lightsaber


                                  Meanwhile today reports out that oil supply glut has returned to pre-pandemic levels, with consumption forecast for 4q to be 120,000 barrels/day lower than 2019.

                                  https://www.marketwatch.com/story/oil-g ... D=ref_fark

                                  So a bit of a rise in 2021, but nothing like the good old Bush-era 120+ bucks per barrel. We're still seeing refineries idled (for example in Texas) due to lack of demand (or, refineries managing price by controlling supply) so a lot of this price hike is simply at the whims of the C-suites.
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                                  Elementalism
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 2:55 pm

                                  MohawkWeekend wrote:
                                  Having worked in the oil industry and been involved in aviation too, I've been watching with a retired guy's interest some troubling recent developments -

                                  "U.S.’s Biggest Gasoline Pipeline Halted After Cyber-Attack" - this morning on Bloomberg

                                  "Gasoline Prices Set To Soar This Summer" - Oil Price.com

                                  "Gas shortages predicted this summer" - CNN

                                  "Biden poised to halt new fossil fuel leasing on federal land and water Wednesday" - Washington Post

                                  I was a teenager in the 70's and remember what happened to aviation back then when fuel was scarce and doubled in price. I like to see what A.netters think.



                                  That cyberattack disrupted supply for the East\Southeast. Now people are panic buying. Once this pipeline opens up again I dont think this will be a long term effect. Any gasoline shortages will be due to capacity shut down during COVID when millions of drivers worked from home and millions others were put out of work. They will need spin up capacity. But that doesnt happen over night.
                                  Leasing on federal land is inconsequential to this summer. It takes years to develop a field and bring to capacity. Plus there was quite a bit of capacity that was shut down in the last few years and especially in the last 12 months that is sitting idle.
                                   
                                  PHLspecial
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 3:10 pm

                                  MohawkWeekend wrote:
                                  I hope you are right. I keep coming back though to the near term i.e. the next 18 months. Can all the airlines in their present financial condition survive $2.25 jet fuel? We all hope that a Black Swan doesn't cause that number off by alot.

                                  I mean its not hard to ask for a bailout.
                                   
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                                  lightsaber
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 3:47 pm

                                  Spacepope wrote:
                                  lightsaber wrote:
                                  I think oil will be pricey in coming years.

                                  Lightsaber


                                  Meanwhile today reports out that oil supply glut has returned to pre-pandemic levels, with consumption forecast for 4q to be 120,000 barrels/day lower than 2019.

                                  https://www.marketwatch.com/story/oil-g ... D=ref_fark

                                  So a bit of a rise in 2021, but nothing like the good old Bush-era 120+ bucks per barrel. We're still seeing refineries idled (for example in Texas) due to lack of demand (or, refineries managing price by controlling supply) so a lot of this price hike is simply at the whims of the C-suites.

                                  Global demand is being hit hard by India. That is creating the short term trend, in my opinion.
                                  https://mobile.reuters.com/article/amp/idUSKBN2CS0OH

                                  I think Zoom (remote work) and an overall slower economy will result in less demand inn2021/2022. Yet I believe so much capacity was idled that it will take an excellent business case to bring it back online.

                                  This isn't by c-suite whim. Much of the idled field capacity requires a price over $100/bbl to justify restarting. It is hard to justify idling a field and the same for restarting.

                                  I personally know too many workers that will only support a production increase for the right pay; otherwise, they have other opportunities. Sure they can be replaced, but as anyone who has read Adan Smith's "Wealth of Nations" knows, that takes financial incentive. (Yes, new books out there, but that book is the basics and while there are many ways now to approach the basica, human behavior hasn't changed). People want to be bribbed to work a "not-green" industry.

                                  My friends were actually supporting those now idle refineries. Do you know how much effort goes into restarting a refinery? We are talking a large team of surge talent (contactors) working 70+ hour weeks fir 10+ weeks to restart and bring up to expected efficiency. Then they are let go. :wideeyed: If there is a series if refineries to restart, they move on. I know three of my friends have declined the opportunity to help restart a refinery as the pay wasn't enough for giving up their current work for 10 weeks of pay.

                                  We haven't yet returned to the new normal demand. That won't happen until India gets back to growth. Heck, it won't happen while the EU and (partial) UK lockdown continues.

                                  Eventually enough people will be vaccinated that lockdowns will stop. Then, and only then, will we have the oil price spike I'm talking about. Australia and New Zealand are not allowing tourism or business travel. The ME3 hubs are barely functional.

                                  This summer, demand will increase beyond ready supply. When exactly, I do not know. Only then will companies scramble to restart refineries and purchase the oil needed to feed them. But for example, many areas cannot survive economically without tourism. I expect a restart of the global flying as vaccination rates become sufficient.

                                  So I agree, many refineries are idled. We still have many airline employees not working. I look forward to their recall and the spike in oil prices resulting from that spike in demand.

                                  When do you expect the ready slack to be taken up? Many countries will miss the 2021 peak (summer) season. That we can agree on.

                                  With the promise of cutting carbon 50% quickly, everyone knows oil cannot be a career anymor, in my opinion. So anyone working it is looking for the quick buck.

                                  Lightsaber
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                                  mxaxai
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 4:27 pm

                                  MohawkWeekend wrote:
                                  Lightsaber is correct the key will be cash flow. Other threads have discussed the industry"s return to profitability. What happens if Jet goes up 10 or 20 percent from here?

                                  Jet fuel is currently at ~ 70 $/bbl. That's still a lot less than 10 years ago, and it didn't kill aviation back then.

                                  Additionally, diesel vehicles are declining in popularity and many homeowners are replacing oil heating with alternatives. That should make jet fuel cheaper relative to the crude oil price.
                                   
                                  Tiredofhumanity
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 6:43 pm

                                  Returning to the latest incident - jet prices are going up everywhere, not just on the US Eastern Seaboard. Wall Street speculators are being opportunitists again, just like '08.

                                  As carriers now have high amounts of debt, how would they convince these same investors to spend large amounts of capex on more modern aircraft (NEO's and Max's) to replace older types? Seems like a dilemma...
                                   
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                                  lightsaber
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 9:23 pm

                                  mxaxai wrote:
                                  MohawkWeekend wrote:
                                  Lightsaber is correct the key will be cash flow. Other threads have discussed the industry"s return to profitability. What happens if Jet goes up 10 or 20 percent from here?

                                  Jet fuel is currently at ~ 70 $/bbl. That's still a lot less than 10 years ago, and it didn't kill aviation back then.

                                  Additionally, diesel vehicles are declining in popularity and many homeowners are replacing oil heating with alternatives. That should make jet fuel cheaper relative to the crude oil price.

                                  We're still living in an era with surplus stored from the pandemic. Now this link says we're about out of surplus, I think their is still surplus in storage, but this is more symantics on what level of storage is surplus.
                                  https://oilprice.com/Energy/Energy-Gene ... e.amp.html

                                  I agree oil is today cheap. Once the global rebound starts (not possible with India, EU and others in lockdown) then we see demand. I see neither the field capacity nor refining capacity online.

                                  It will take much higher refining margins to pay to rake a refinery out of mothballs.

                                  Only once refineries are back online will oil react.

                                  We should be able to agree the economy is no where near normal (e.g., my employer is still discussing return to office an will give a month of notice, this will increase my monthly driving by a round 600km or so as well as most of my coworkers by similar amounts, on average).

                                  Most of my coworkers fly a lot (we do work aerospace...). 95% haven't flown in a year and everyone seems to have a trip planned.

                                  As noted, numerous refineries are still mothballed. It is a question of how much surplus remains to be pulled down.

                                  Oil is a very "show me the money" industry. During the good times, pay is staggering. Now... no.

                                  We are at the end of really cheap oil thanks to Covid19 lockdowns. The question is when does demand pick up and people realize stored oil/fuel is worth more tomorrow?

                                  I'll seem silly until India comes back online as well as Europe.

                                  Lightsaber
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                                  MohawkWeekend
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                                  Re: Jet Fuel Prices this Summer

                                  Wed May 12, 2021 10:46 pm

                                  mxaxai wrote:
                                  MohawkWeekend wrote:
                                  Lightsaber is correct the key will be cash flow. Other threads have discussed the industry"s return to profitability. What happens if Jet goes up 10 or 20 percent from here?

                                  Jet fuel is currently at ~ 70 $/bbl. That's still a lot less than 10 years ago, and it didn't kill aviation back then.

                                  Additionally, diesel vehicles are declining in popularity and many homeowners are replacing oil heating with alternatives. That should make jet fuel cheaper relative to the crude oil price.



                                  All true except airlines are in alot worse financial shape now then they were 10 years ago. It wasn't that long ago that airliners.net was full of stories about how the unions were going to get back what they gave up during the 2000's bankruptcies. They got that and more. Recall too the interest rates airlines were forced to pay on the 10's of billions they had to borrow to get through the last year. ( I still can't believe banks took frequent flier plans as collateral). And their most profitable customers aren't going to return in the numbers of the past anytime soon. It's the next 12 months that will be the most challenging. The most popular vehicles being sold today are big SUV's and pickups. We aren't seeing gasoline and diesel demand measurably fall off in the next year or year and half.
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                                    Tiredofhumanity
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                                    Re: Jet Fuel Prices this Summer

                                    Wed May 12, 2021 10:57 pm

                                    Looks like the pipeline is at least back up. Hopefully things will stabilize by Memorial Day (see my post in Non-Av for source).

                                    MohawkWeekend wrote:
                                    mxaxai wrote:
                                    MohawkWeekend wrote:
                                    Lightsaber is correct the key will be cash flow. Other threads have discussed the industry"s return to profitability. What happens if Jet goes up 10 or 20 percent from here?

                                    Jet fuel is currently at ~ 70 $/bbl. That's still a lot less than 10 years ago, and it didn't kill aviation back then.

                                    Additionally, diesel vehicles are declining in popularity and many homeowners are replacing oil heating with alternatives. That should make jet fuel cheaper relative to the crude oil price.



                                    All true except airlines are in alot worse financial shape now then they were 10 years ago. It wasn't that long ago that airliners.net was full of stories about how the unions were going to get back what they gave up during the 2000's bankruptcies. They got that and more. Recall too the interest rates airlines were forced to pay on the 10's of billions they had to borrow to get through the last year. ( I still can't believe banks took frequent flier plans as collateral). And their most profitable customers aren't going to return in the numbers of the past anytime soon. It's the next 12 months that will be the most challenging. The most popular vehicles being sold today are big SUV's and pickups. We aren't seeing gasoline and diesel demand measurably fall off in the next year or year and half.


                                    What can the carriers do aside from shrink? US firms do not want to drill or invest in new rigs, and the OPEC+ nations consider a "balanced" market to be $100ish/bbl, yet they won't admit it.
                                     
                                    MohawkWeekend
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                                    Re: Jet Fuel Prices this Summer

                                    Wed May 12, 2021 11:45 pm

                                    I should have added the ULCC's are going to continue to put pricing pressures on the majors. ULCC's didn't really exist 10 years ago. And 2 more are about to join the fold.
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                                      MohawkWeekend
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                                      Re: Jet Fuel Prices this Summer

                                      Wed May 19, 2021 4:48 pm

                                      Southwest discusses rising jet fuel prices in earning statement - https://www.cnbc.com/2021/05/19/covid-t ... -rise.html
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                                        Tiredofhumanity
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                                        Re: Jet Fuel Prices this Summer

                                        Wed May 19, 2021 5:20 pm

                                        MohawkWeekend wrote:
                                        Southwest discusses rising jet fuel prices in earning statement - https://www.cnbc.com/2021/05/19/covid-t ... -rise.html


                                        Again - what can the carriers do without spending capex on orders for new types?

                                        CNBC and these investor types can thank themselves for the increase in fuel since January. They're loving the dividends from the spending "restraint" from US based producers, so the airline industry is once again dependent on the Middle East.

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