Is this an indicator of where we are headed?

[foxmoth]

its all just math really.

find a good job and stick with it. Here we go.

Nobody here has mentioned Cathay dumping slow revenu routes.

[foxmoth]

its all just math really.

find a good job and stick with it. Here we go.

Nobody here has mentioned Cathay dumping slow revenu routes.

oops slow finger on submit buton. sorry

[Dockjock]

At least a ton of boomers are retiring to help cushion the downturn.

[North Shore]

One has to ask just what the hell are governments doing with the massively higher windfall from the gas taxes?

How about the companies that produce it? Sure, the price is now ~ $130/bbl, but the cost of production is still roughly where it was a year ago, when oil was $70 a barrel. Where's that extra $60 going?

[carholme]

Re the American Airlines report on the first page, where it says that the first bag will cost $15, saw on the news this morning that the second bag will be $25 and third $100. It won't take the others long to catch up either,

carholme

[sky's the limit]

And the hits keeps on coming.... Speculation of $200/barrel in the next 18 months. At this rate, I bet we see that sooner than later.

The British Pound is roughly $1.95 CND, making the price per litre about $2.23 cents.... OUCH. Hopefully all this is the impetus to make some real change in policy, limiting vehicles in city centres, taxing large displacement engines, promoting real car-pooling, etc, etc.


Oil soars to new record over $135

Oil prices have risen more than 40% so far this year

The price of oil hit a record high above $135 a barrel on Thursday - more than twice what it cost a year ago.

The latest surge was driven by data showing that supplies of crude in the US had fallen by 5.4 million barrels.

US light, sweet crude for July delivery reached $135.09, taking its gain for the year so far above 40%. In May 2007 it was priced at about $65.

Higher oil prices push up the price of fuel at the garage forecourt, home energy bills, air travel and food.

The average price of a litre of unleaded petrol in the UK is now 114 pence, according to Experian Catalist, and diesel has risen to an average of 126.4 pence per litre.

Meanwhile companies have been reacting as the impact continues to feed through into the wider economy.

American Airlines has become the first US carrier to charge for checked-in luggage as it tries to increase revenue. It will also cut "thousands" of jobs.

Graph of light, sweet crude prices in 2008

Air France-KLM said on Thursday that the cost of oil would make the coming year "challenging".

And earlier this month, British Gas owner Centrica signalled that bills could rise again, as its profits are squeezed by higher gas and power prices.

Investment needed

UK Prime Minister Gordon Brown is working with international partners to persuade the Opec oil producers' cartel to increase supply.


All this excess profit that has been generated by the oil industry really needs to be invested in refineries, pipelines and oil wells
Francisco Blanch, Merrill Lynch

His spokeswoman said that Mr Brown recognised the increases were having an effect on UK consumers and he would be raising this at the forthcoming EU and G8 summits.

But one analyst said Mr Brown's efforts were likely to prove in vain and political pressure should, instead, be exerted on leading producers to invest more in long-term capacity.

"All this excess profit that has been generated by the oil industry really needs to be invested in refineries, pipelines and oil wells," Francisco Blanch, head of global commodities research at Merrill Lynch, told the BBC.

"This is what the market is asking for at the moment and we just need to ensure... we have the political goodwill also supporting this investment."

Opec has so far blamed price rises on speculators and says there is no shortage of oil.


All but three of Opec's members are already at their maximum daily limits for oil output and pressure has grown on Saudi Arabia, Kuwait and the UAE, which do have spare capacity.

Further rises?

Some analysts have raised the possibility of prices rising as high as $200 a barrel during the next 18 months.

In addition to falling US stockpiles, the continuing weakness of the US dollar has been another factor cited as supporting prices.

The US Energy Information Administration blamed the fall in its stocks figure on a fall in imports and a pick-up in demand from refineries.

Oil prices have set new records in 10 of the last 14 trading sessions.

"You really cannot forecast how much further the market will rally now," said Tatsuo Kageyama from Kanetsu Asset Management in Tokyo.

Man cycles past fuel supplies in Indonesia
Opec members are under pressure to increase output

"All I can say is the market will continue to rise."

Light, sweet crude oil is the type most commonly used for processing into petrol and as a result, it is in high demand.

It has large amounts of the content used to make petrol, top-grade diesel and kerosene. It also has low levels of sulphur.

London's Brent crude set an intra-day high on Thursday, peaking at $135.14 a barrel.

The weak dollar is thought to have played a part in the price hikes, with investors moving money into oil from other areas.

"Oil has performed better than equities and bonds," said Victor Shum from the energy consultancy Purvin and Gertz in Singapore.

"There is money looking for better returns and oil has offered better returns and continues to offer better returns."

[bmc]

Conferences on new revenue sources are becoming increasingly popular. I just got the invite to this one today:

http://www.airlineinformation.org/confe ... .index.htm

[C23flyer]

Rising fuel prices will not really affect me and my sail boat though.

Is there a sailing forum here too? I'm getting my S&S designed O'Day/J.J. Taylor Dolphin ready for early summer launch. I'll post a pic when she's seaworthy.

[Norfolk]

Just saw on Global news that Air Canada is planning on charging for every checked bag now. This is going to get ugly. I don't think WJ will be very far behind them though. It makes you think that the bleeding from AC is more than it appears.

[Stoptheworld]

Perhaps some optimism (at least in the short run)

http://www.telegraph.co.uk/money/main.j ... oil122.xml

The perfect storm that has swept oil prices to $132 a barrel may subside over the coming months as rising crude supply from unexpected corners of the world finally comes on stream, just as the global economic downturn begins to bite.

The forces behind the meteoric price rise this spring are slowly receding. Nigeria has boosted output by 200,000 barrels a day (BPD) this month, making up most of the shortfall caused by rebel attacks on pipelines in April.
Why oil could soon come barrelling down
Keep the motors running: increased oil production from countries such as Brazil, Sudan and Azerbaijan is helping satisfy rising global demand for the fossil fuel

The Geneva consultancy PetroLogistics says Iraq has added 300,000 bpd to a total of 2.57m as security is beefed up in the northern Kirkuk region.

"There is a strong rebound in supply," said the group's president Conrad Gerber.

Saudi Arabia is adding 300,000 bpd to the market in response to a personal plea from President George Bush, and to placate angry Democrats on Capitol Hill - even though Riyadh insists that there are abundant supplies for sale.

Non-OPEC oil production growth

Like the rest of Opec, the Saudis blame "speculators" for running amok, pushing paper contracts into the stratosphere.

The ever-diminishing reserves of oil in the earth's crust will doubtless drive crude prices to much higher levels over time - provided no new technology such as nuclear fusion abruptly changes the picture - but that will not stop cyclical ups and downs along the way.

The world's finely balanced market for crude has been creeping into surplus for several weeks. Opec's monthly report says that demand this quarter will average 85.75m bpd. Supply was 86.8m bpd in April. The fresh output from Nigeria, Iraq and Saudi Arabia may push it significantly further into surplus.

The signs are already surfacing in global inventories. Opec says that stocks held by the OECD club of rich countries are above their five-year average, with "comfortable" cover for 53 days' use. US stocks have edged up for the last four months, though they fell last week.
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# Oil surge may trigger truly open skies
# Read more Ambrose Evans-Pritchard

While it is widely reported that output from the non-Opec trio of Norway, Britain, and Mexico has relentlessly fallen, it is less well known that a clutch of other countries are gradually filling the breach.

The US Energy Information Agency says non-Opec supply will edge up by 600,000 bpd over coming months as Brazil, Azerbaijan and the Sudan raise production. By next year, the US itself will be producing enough extra oil to shave its import needs.

OPEC surplus crude oil production

None of this has been enough to curb the buying frenzy this spring. Goldman Sachs has warned that prices could reach $200 in a final spike, and even the bears at Lehman Brothers say there may be enough momentum to keep the boom going until Christmas.

It is unclear whether hedge funds and investors piling into futures contracts have now become the driving force in a speculative bubble. The Bank of England said yesterday that they were not a factor.

Lehman's latest report - Is it a Bubble? - says commodity index funds have exploded from $70bn (£36bn) to $235bn since early 2006. This includes $90bn of fresh money. Energy takes the lion's share. Every $100m flow of investment money into oil lifts crude prices by 1.6pc, it said.

"We see many of the ingredients for a classic asset bubble," said Edward Morse, Lehman's oil expert.

This week has seen a dramatic surge in oil contracts dated as far forward as 2016. Futures have moved higher than the spot price, a rare event known as "contango". This can cut both ways: either as a sign of an impending supply crunch years hence; or that the futures market has become unhinged from reality.

What we know is that the International Monetary Fund has cut its forecast for world growth for 2008 three times since last autumn to 3.7pc, and the United Nations is predicting just 1.8pc - technically, a global recession. The major oil forecasters have halved their estimates for crude demand growth to 1.2m bpd.

The bulls say that the US housing crash and spreading contagion in Britain, Spain and Japan do not matter much for oil in the changed world of rising Asia.

The US added just 7pc of crude demand growth from 2004 to 2007, compared with 34pc for China, 25pc for the Middle East and 17pc for emerging Asia.

Goldman Sachs argues that fuel prices in most of these countries are held down by state controls, insulating demand from the effect of any global downturn.

But this could change. Egypt - the most populous Arab country - has just raised petrol prices by 40pc. Rumours swept China yesterday that Beijing was preparing to lift fuel prices. While the Chinese government is unlikely to risk protests in the lead up to the Olympics, the jitters are a reminder that Asian states will have to take action sooner or later to wean their societies from subsidies.
# Warning over volatile oil prices
# Saudi-US oil axis is key

Almost all emerging nations have to slam on the brakes in coming months to curb inflation before it starts spiralling out of control. Inflation has hit 30pc in Ukraine, 22pc in Vietnam, 8.5pc in China, and double digits across most of the Gulf.

The countries that account for the most of the growth in oil demand over the last two years are almost all nearing the limits of easy economic growth.

[BigWillyStyle]

Possibly taking this discussion in a new direction, but has anyone noticed that all of this price escalation and production increase is taking place while the majority of the world is paying lip service to the (pointless IMHO) Kyoto protocol?

Hypocrisy anyone?

[C23flyer]

The Fraser Institute just released a complimentary copy of Martin Durkin's The Great Global Warming Swindle to many secondary schools in Canada. I'm not a fan of the FI but it is always a good thing to look at both sides of the equation before passing judgement. The premise of the documentary is that CO2 is not driving and has never driven climate change. There is much interesting dialogue with scientists who sat on the IPCC and expressed dissenting opinions about the final recommendations of the panel but were still listed as authors. If you can get your hands on it, it's a thought-provoking piece.

[Expat]

Watching the news here about Middle-Eastern and Asian airlines, nothing seems to bother them. As mentionned earlier, airlines with cash will weather the storm easier. North American and some European airlines were almost bankrupt before this latest crisis. My feeling is that we will see different colored tails in our skies before long.

[jpar84]

What about more fuel efficient aircraft?? How much is being done on that end???

I must say as somebody who is about to start his flight training this thread alone is enough to give me nightmares. Good thing I went to uni first for something to fall back on

[alctel]

Just a quick bump for good(ish) news - it looks as if oil will slump back to around $80 a barrel around spring 2009. Of course it might get worse short term, and the long term is always going to trend upwards, but in all likelyhood its not going to stay at the price it is now.

[invertedattitude]

The cost of a barrell of oil drops $4 one day, next day the cost of gas jumps 4.9c/litre locally... I mean I understand supply and demand but...

1.37/litre for regluar here now,

AVGAS is around 1.65/litre last I checked.

[Wacko]

Just a quick bump for good(ish) news - it looks as if oil will slump back to around $80 a barrel around spring 2009. Of course it might get worse short term, and the long term is always going to trend upwards, but in all likelyhood its not going to stay at the price it is now.

Where did you hear this?

[Kelowna Pilot]

Where did you hear this?

Probably someone in a great deal of of denial...

The effects of peak-oil are starting to be felt, and this is just the first inning.

It's a piss-off for me because I like to travel, and the cost of flying is going to start to get a lot more expensive.

Would I start flight training now? No way, not unless I was a millionaire and could afford to lose the investment in time and money.

Aviation is a risky, volatile industry at the best of times. Throw peak-oil into the mix and it becomes a decidedly loosing proposition.

[alctel]

Just a quick bump for good(ish) news - it looks as if oil will slump back to around $80 a barrel around spring 2009. Of course it might get worse short term, and the long term is always going to trend upwards, but in all likelyhood its not going to stay at the price it is now.

Where did you hear this?

I do a lot of reading on economics, since it interests me a lot.

The main reason the price of oil is so high at the moment is the speculative market, NOT LOW PHYSICAL STOCKS - for example, in physical reserve oil stocks the US and Canada has the most in living memory - if all oil were to dry up today, the US would have enough on hand for 3 MONTHS of sustained normal use. This is a good quote from the Iranian oil minister Hossein Arbedili on why they are storing 25 million barrels of heavy, sour crude oil - “there are simply no buyers because the market has more than enough oil.” Mike Wittner (head of oil research at the Societe Generale) agrees with him “There’s various signals out there saying for right now, the markets are well supplied with crude.”

The thing is, with the weakened dollar, a lot of outside investment is going into commodities such as oil - and of course the more money that goes in, the higher the value goes up and the more money people who have invested into it make. Its kind of a cycle, a classic bubble - with the added fact that we are now on the download slope of oil findings vs demand, which means its scarity value will increase. Whats compounding the fact is that the US oil reserve is STILL buying barrels for god knows what reason - as stated it already has more that it needs. This is adding to the US debt. If the US actually SOLD some oil from their stocks, not only would they make a lot of money back (the gross price of all the oil in the reserve is about 20-30 bucks a barrel) but it would also collapse the speculative bubble a bit. No idea why they aren't doing this, because as it stands the oil companies are making a KILLING but noone else is (maybe the fact that Cheney is the ex-CEO of Halliburton and most of the top White House officals have strong ties to the oil industry may have something to do with it, if thats not too tin-foil like).

Once the new US administration comes in (its going to be the democrats, barring a major screw-up) and steps are taken to stabilise the US dollar, new renewable clean energy projects come into play and maybe changes to the way commodities are bought and sold, we should see the price drop down a bunch (not to pre-price surge levels due to the fact the stuff will run out eventually, but to a lot more reasonable value). This will probably be next spring or so.

Its an interesting topic, and although the Republicans have done a lot to drive up the oil price, the democrats aren't blameless either - early in Bill Clintons first term he reduced the amount of capital speculators had to put up up front. This reduced the amount of money people needed and risked and paved the way for this (along with the bush administration removing the requirement of the SEC to have speculators put their name on the deals for the futures).

[Wacko]

I have no doubt in my mind that "IF" the US Democrats take office things will get better. Mind you, like you said, the oil companies are making a killing and it's in their interest to keep Republicans in power... with so much extra cash... who knows. On the flip side.. there are people who are still trying to get into the oil market... if you're right about the price of oil going down by as much as you're saying.. there's going to be a lot of people who will receive margin calls... which will possibly put many people into bankruptcy... so the potential for a second wave of recession may be around the corner.

As for the speculators... I still don't understand why oil is traded on the stock market.

[sez]

most probably oil prices will be around 170 USD/barrel next year nowadays. I think higher prices nothing to do with supply and demand, It 's all about the investment of multinational companies. 4 years ago Crude oil price was about 30 USD. Alberta has huge reserves but the cost to get Oil is about 35 USD due to rezerves are in sand. Actually this explains the Boom in Economy for Whole World. Costs are about 18-40 USD and the prices are about 130 USD. but permanent high prices cause Inflation, and costs are getting higher and higher... Consequently to avoid diminishing marginal utility, prices are getting higher. and now we are facing a new equilibrium point. Also an attack to Iran, probably next year, will rise the prices. And no matter whoever governs US. its foreign policy will not be changed.

Some American environmentalists believe that it is possible to make a complete switch from crude oil to alternatives by 2050. This is very unrealistic as crude oil provides us with more than just a form of energy. It is a raw source of chemicals for manufacturing drugs, plastics, chemicals, and fabrics.

I hope Some American environmentalists are right otherwise palm leaf are gonna be essential substitute for mapple leaf...

[Expat]

In 1986, Bush senior went to Riyad to plea for an increase in oil prices. He said that if the prices were to stay at 20 dollars, he would do something about it. I lost the article, but read it a short while ago.
Then, during the Afghan and Iraqi invasion, the US used a lot of oil from the strategic oil reserve. They immediately started to replenish the reserve, when oil was at 70 dollars. That alone created a demand that further fueled the prices higher. Now looking at these actions, it is clear that the high prices are exactly what the White House wants. Did anybody hear them complain about high prices? No!
On the contrary, they continue to speculate attacking Iran, one of the largest oil producer. Of all the things that Bush complains about, not one has to do with the high prices of oil.
There is something very fishy there.
The US auto industry is finally getting what was announced decades ago. Punishment for producing gaz guzzlers. The Airline industry is falling apart, the US deficit is beating records everyday, the trade deficit also. No one seems to care in the US, in an election year. They talk about Iraq...and the Idol show...

[Wacko]

Time to invest in Europe and start shitting on the US... You know your country is f@cked when Mexicans are actually LEAVING because they can get paid better in Mexico!

I think Obama might be able to bring everything back in perspective for the Americans... I just hope he'll win. Remember... Bush got reelected on fear of more terrorist attacks... the vast majority of the American public is sooooo narrow minded and ignorant I can see the Republicans win just because everyone is speculating the Democrats will take office.... it's the US religious fanatics and conservatives that vote... not the hippies and the X generation.