U.s. Airlines Hike Fares Again As Oil Hits Record

[jB-Rocks]

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[savyinvestor]

This can't be correct! Didn't our resident expert say crude oil prices would be going down? So whats the prediction now? I say $60. shortly. Savy

 

[TheDog2004]

It's about dang time. Eventually something was going to give - all airlines failing or airfares going up. Fortunately for everyone in the business the latter has happened.

 

[SpinDoc]

It's about dang time. Eventually something was going to give - all airlines failing or airfares going up. Fortunately for everyone in the business the latter has happened.

[post="260186"][/post]​

EXCELLENT. With fares going up, maybe
load factors will fall back into a reasonable
level of around 72%. It's getting dang tough
to travel as a non-rev these days.

Oh, and Savy, there still is no RATIONAL
reason for the continuing rise in oil prices.
It's all speculation on the part of investors
in the oil futures market. There is NO WAY
they can go up indefinitely.

 

[USA320Pilot]

If crude oil futures prices continue up how do speculators ever profit? Will only accumulation occur?

Regards,

USA320Pilot

 

[argentomaranello]

If crude oil futures prices continue up how do speculators ever profit? Will only accumulation occur?

____________________________


Its the "Greater Fool Theory" of course. Financial buyers sell to other financial buyers who then sell to still other financial buyers, ultimately expecting that a commercial user will come along, buy those futures from the last one in the chain and then take delivery. It will work, and prices can move higher, as long as enough commercial users remain in this game to clear the market.

 

[jimntx]

It's all speculation on the part of investors
in the oil futures market. There is NO WAY
they can go up indefinitely.

[post="260206"][/post]​

SpinDoc that would be true if crude oil were a "final market" product. However, since it is an input rather than an output, theoretically, yes it can go up indefinitely because the "consumer" of the crude oil can continue raising the price of the "final product"--i.e., gasoline, jet-A, home heating oil.

It wasn't that many years ago that those of us in the oil business were moaning over our martinis that "if we could only get crude oil up to $20/bbl, we might be able to survive." (Mind you at the time, Texaco at the depressed price of $17/bbl for crude oil had revenues in excess of $34 billion a year. Exxon had over 3 times that much revenue.)

So far, the oil companies have been unsuccessful (to their great relief and joy) in finding a point of price resistance for gasoline in the American public. The average Joe Schmoe would rather give up custody of his children than give up driving alone in his Hummer to work (and that's only a slight exaggeration). How many times have you seen on the 10pm news children being removed from a home for neglect and there is a $30,000+ pickup in the driveway of that home? I remember when people in the city drove pickups only because they were cheaper than cars, or they actually DID need one in their line of work.

The idea that here in the heart of oil country (Dallas) people would be readily paying over $2/gal for gas boggles my mind, but last night I was almost late meeting some friends for dinner because I had to wait almost 10 minutes for an available pump at the Shell station.

 

[SpinDoc]

So far, the oil companies have been unsuccessful (to their great relief and joy) in finding a point of price resistance for gasoline in the American public. The average Joe Schmoe would rather give up custody of his children than give up driving alone in his Hummer to work (and that's only a slight exaggeration).

You are right about your assumptions, however,
when Joe runs out of money for gasoline for his
truck or SUV, then he stops buying it and the
greedy oil companies will have to lower their
prices to entice Joe back to the street. Either that,
or a large group of Joe Citizens needs to pay a
visit to the President of each of the big oil
companies and remove them from this planet.

 

[jimntx]

I'm glad to know that oil can't keep going up.

Oil strikes new record over $58

OPEC signals it will discuss a second output boost if prices stay above $55 for the next two weeks.
April 4, 2005: 7:38 AM EDT

The Goldman Sachs Group: Company Info
LONDON (Reuters) - Oil prices raced to all-time peaks Monday, hitting a new record over $58 a barrel as OPEC said it had begun discussing a second output rise to try to quell the market's rally.

U.S. light crude for May delivery, New York's active contract, rose 88 cents to an active contract record $58.15 a barrel. That surpassed Friday's high of $57.70, which was triggered by a forecast prices could spike above $100 because of robust global demand and tight spare capacity.

The September contract became the first ever to cross the $60-a-barrel threshold, hitting a high of $60.03 a barrel.
London's Brent crude was trading $1.02 higher at $57.53, easing from a record of $57.65 shortly before.

 

[savyinvestor]

Just read an article on Fox about oil. Now $100. a barrel is feared. Savy

 

[delldude]

Just read an article on Fox about oil. Now $100. a barrel is feared. Savy

[post="260395"][/post]​

great..just great....

 

[mweiss]

since it is an input rather than an output, theoretically, yes it can go up indefinitely because the "consumer" of the crude oil can continue raising the price of the "final product"--i.e., gasoline, jet-A, home heating oil.

That's only true if you have a monopoly or collusion (which is, in effect, a monopoly) somewhere downstream.

 

[FM2436]

Just read an article on Fox about oil. Now $100. a barrel is feared. Savy

[post="260395"][/post]​

That will be when the world's economy collapses and we'll all need to become hunters and/or farmers to feed families and ourselves.