Oil spikes past $110

autofixer

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Aug 20, 2002
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Oil spiked past $110 per barrel today on its way to test $147. Where is all of the outrage in the press and on these boards? It will cause a double dip.

http://www.ft.com/cms/s/0/47ddd6e4-60eb-11e0-8899-00144feab49a.html#axzz1IrUix0Eb
 
Oil spiked past $110 per barrel today on its way to test $147. Where is all of the outrage in the press and on these boards? It will cause a double dip.

http://www.ft.com/cms/s/0/47ddd6e4-60eb-11e0-8899-00144feab49a.html#axzz1IrUix0Eb
Remember the story of the frog that was thrown in a pot of boiling water vs. the one that was put into a pot of cold water that was then set on the stove? We akk know which frog survived.

because oil spiked before, no one is shocked anymore...

let's see which frogs, I mean airlines, figure out how to survive.

oh, and first quarter financials will be out in a couple weeks and with them revised guidance for the rest of the year....
 
Yeah and Doug continues to lie as to why we don't hedge....

Alaska the king of Hedge.


http://classic.cnbc.com/id/15840232?video=3000015381&play=1

I can assure you that Wall Street is fully hedged and the current price rise can be linked to large institutional funds pouring money into the oil futures market and driving the price up. Oil needs to be taken off the wall street casino and allow the true supply and demand levers to determine the price. The cost of extraction, transportation, and marketing is around $50/bbl. Add in a profit of 20% to keep exploration going, and it should be no higher than $60/bbl on the open market. Face it, we are being had by our government and Wall Street, and they are laughing all the way to the bank.

In the meantime, they are killing our economy, and making it very difficult for businesses to survive, let alone move the economy forward. Greed will kill us all soon.
 
Would the airlines that hedge be some of those who help drive up the cost of oil? Taken as an industry, the airlines hedge billions of gallons of oil/heating oil/diesel/etc.

Jim
 
Would the airlines that hedge be some of those who help drive up the cost of oil? Taken as an industry, the airlines hedge billions of gallons of oil/heating oil/diesel/etc.

Jim
Jim,
Jet fuel directly is not hedged... hedges are in other petroleum products. Airlines consume a fraction of all the petroleum produced.
Hedging involves a winner and a loser... the counterparty is just as interested in winning as the airlines and often have more resources....
so, no, hedging by airlines does not affect the price of jet fuel.
 
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Jim,
Jet fuel directly is not hedged... hedges are in other petroleum products. Airlines consume a fraction of all the petroleum produced.

Ya reckon that's why I didn't include jet fuel in the list of products (although I've seen one airline with small quantities of jet fuel hedges)?

Hedging involves a winner and a loser... the counterparty is just as interested in winning as the airlines and often have more resources....
so, no, hedging by airlines does not affect the price of jet fuel.

Buying stock produces winners and losers - what's the point?

Are you saying there's no winners and losers when airlines hedge fuel? I think the last half of '08 and the first half of '09 for US disprove that.

Do airlines hedge using a different mechanism or markets than others?

The airlines follow the same accounting rules as everyone else. They use the same markets, the same strategy's, etc as other's. The only thing that sets airlines apart is the reason for hedging - airline want (hope) to reduce the effective price they pay for jet fuel, which isn't an interest to others hedging since the others don't consume vast quantities of jet fuel.

Jim
 
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look everyone needs to relax .... the government says that things are getting better ,, i heard the president come on TV just a few days ago and talk about the recovery .....


What's everyone so worried about ?


:rolleyes:
 
There is no outrage because a democrat is president and the media is nothing more than a DNC mouth piece.


As to airlines hedging one thing making that almost impossible is there has develop a big gap between home heating oil and oil vs. spot Jet A prices. They used to move much more closer together so a hedge in the oil was almost a hedge in the jet A that is less and less the case.
 
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As to airlines hedging one thing making that almost impossible is there has develop a big gap between home heating oil and oil vs. spot Jet A prices. They used to move much more closer together so a hedge in the oil was almost a hedge in the jet A that is less and less the case.

I saw an article today that said DL is switching it's hedges away from the WTI Cushing that NYMEX uses for futures to Brent North Sea oil because of the reason you stated.

Jim
 
Ya reckon that's why I didn't include jet fuel in the list of products (although I've seen one airline with small quantities of jet fuel hedges)?



Buying stock produces winners and losers - what's the point?

Are you saying there's no winners and losers when airlines hedge fuel? I think the last half of '08 and the first half of '09 for US disprove that.

Do airlines hedge using a different mechanism or markets than others?

The airlines follow the same accounting rules as everyone else. They use the same markets, the same strategy's, etc as other's. The only thing that sets airlines apart is the reason for hedging - airline want (hope) to reduce the effective price they pay for jet fuel, which isn't an interest to others hedging since the others don't consume vast quantities of jet fuel.

Jim

Jim,
you asked
Would the airlines that hedge be some of those who help drive up the cost of oil? Taken as an industry, the airlines hedge billions of gallons of oil/heating oil/diesel/etc.

Jim

and the answer is NO. Hedging by some airlines does not drive up the cost of jet fuel.
Once again, there is a counterparty in every hedge transaction - so to think that one party could drive up the cost of the product and do it better than the power of the other party is just not accurate.
Do you know that many of the counterparties in hedge transactions are oil companies themselves? You certainly can't believe that airlines have more power over the market than oil companies.
And there is a not much of a market in hedging jet fuel because precisely the size of the market is quite small... which is why the majority of products that airlines hedge are related products.
.
I am sure you are getting at the hurt that US - and perhaps its employees - and perhaps you - might incur because US doesn't have hedges while other carriers do.
.
Not hedging at all is tantamount to not carrying any casualty insurance - except that there are rules that require airlines to carry insurance.
.
there is a far greater certainty that there will be runups in jet fuel prices than there are that there will be an accident and yet no one believes that allowing airlines to not have insurance is a good thing.
.

I do not like seeing anyone be harmed... but there are some basic economic safety nets which US chose not to use and which other carriers have... the consequences will be apparent by the 2nd quarter for sure... and there will be indications of what kind of damage fuel will do to all of the industry in a couple weeks.
.
I still stand by my prediction that if fuel prices remain high through the remainder of the year, US' future might look compromised compared to other airlines.
.
on this day when Washington wrangles over the budget, the best thing you can hope for is that one is approved that includes deep cuts in spending... that will be the best thing to bring the cost of oil back down. If it's business as usual, then Katie bar the door.
 
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look everyone needs to relax .... the government says that things are getting better ,, i heard the president come on TV just a few days ago and talk about the recovery .....


What's everyone so worried about ?


:rolleyes:

Herein lies the problem. High level politicians are NOT worried about oil prices, because they are in hock to Wall Street who paid for their elected positions and have the money to control the market. I heard a CBS News analyst talk about the disconnect between supply and demand, and the manipulations that are occurring in the futures market. According to the report, the Wall Street casino is betting "all in" that social and political unrest will spread across the Middle East and that FUTURE oil supplies will be at risk. This is in direct conflict to actual CURRENT market supplies, and we are currently in a 20% surplus. We all know that Wall Street has the economic power to drive the futures market higher for their own gain, and they will sell their contracts before the market tanks (with some advance insider knowledge of course). In the meantime, they will screw the common man and think nothing of it, and the politicians will be rewarded when election time rolls around. It is a vicious cycle that enriches the wealthy and brings the overall economy down. We are truly being held hostage by Wall Street, and absent market transparency and regulation, greed and corruption continue unabated.
 
I can assure you that Wall Street is fully hedged and the current price rise can be linked to large institutional funds pouring money into the oil futures market and driving the price up. Oil needs to be taken off the wall street casino and allow the true supply and demand levers to determine the price. The cost of extraction, transportation, and marketing is around $50/bbl. Add in a profit of 20% to keep exploration going, and it should be no higher than $60/bbl on the open market. Face it, we are being had by our government and Wall Street, and they are laughing all the way to the bank.

In the meantime, they are killing our economy, and making it very difficult for businesses to survive, let alone move the economy forward. Greed will kill us all soon.

So let me get this straight: The USA consumes about 25% of the world's daily oil consumption yet evil "Wall Street" traders here in the USA, and, apparently, the US government, are responsible for the current world price of oil? The other 6.6 billion people on the planet not living in the USA don't factor into the current price? Nor do the other 190-some world governments?

If your "theory" was anywhere near reality, wouldn't the oil producing countries of the world absolutley love us? After all, you claim that the best they could do (without the evil US wall street traders and the evil US gov't) would be about $60/bbl? So right now, the OPEC nations (many of which accept western money for oil but aren't really our friends) and other oil producing states are getting an additional $50/bbl above your self-proclaimed natural market price just because of oil speculators on big bad Wall Street? Every oil exporting nation should be overjoyed at Americans' willingness to assist in "gouging" the entire world to the tune of $50/bbl.

Yes, and the only reason your car doesn't get 300mpg is because GM, Ford and the oil companies have long conspired to keep the secret underhood gadget (that would enable your car to get 300mpg) off the market.

I'm not buying it. Oil is produced all over the world and is consumed all over the world. It's traded in financial markets all over the world. The current price represents the world's perceived value, right now, for a barrel of oil. It's higher than you think it should be, but it's still relatively cheap.

Since we're talking about commodities where the price can be "manipulated" by financial traders in one country with just 5% of the world's population, that makes me wonder who is behind the rise in the price of gold to nearly $1,500/oz? Is there a cabal of evil financial traders somewhere on the globe engaged in a huge conspiracy to cause gold prices to skyrocket over the past few years?