:rolleyes: yep you bedder believe it...



01/11/07

COMMODITIES ANALYSIS; OIL PRICE


Crude oil prices surged higher on Wednesday after the US government reported an unexpectedly large drawdown in inventories for the week ending 26 October. By the close in London front month WTI was trading at a record US$94.40/bbl (up $4/bbl) and Brent was at a new all time high of US$91.70/bbl. According to the DoE inventory data, crude stocks fell by 3.9 million barrels (market expected a build of 600,000 barrels – Reuters) with the biggest portion of the drawdown occurring at Cushing, Oklahoma, the delivery hub for oil traded on the New York Mercantile Exchange, where stocks fell by 3.1 million barrels to 15.1 million barrels. Short term price risk for crude remains positive with traders reporting strong interest in December options at US$100 strikes.

:ugh:Paper Planes - I should have been more specific and you're 100% correct that we all know $10.00 fares are driven by building brand awarenesss.

However, if this oil price continues to move higher then you correctly point out that these initiatives will be cut very short. LCC's are high-volume low-margin businesses & the effect of higher oil prices MUST be passed on.

The point I was trying to make is that Tiger is offering these insane fares at not tomorrows pax but next years. They haven't even got an AOC yet.... We all know who they're backed by but I reckon if the price of oil stays up here the time a pax gets to Hobart next year it will be cheaper to fly home with JQ or DJ - So explain to me how they make that work? :confused:

It's "Omkalai". And it has been closed for some years.

:}

For mathematical proof that man-made global warming is
crap, go here -

http://front.math.ucdavis.edu/author/R.Tscheuschner

Download Article 1 "Falsification Of The Atmospheric CO2
Greenhouse Effects Within The Frame Of Physics".

If the math is too heavey for some, read the summarys
which are written after the proofs. The summarys are on
the money with the math.

If their hedging strategy is appropriate, which I assume is taking quite a number of long positions at the NYMEX, it shouldn't be an issue.

A good business first gets the people on board then slugs up the prices.

$94/bbl is only a record if you ignore the inflationary effects of profligate printing of US$ by the US Govt to pay for their wars. Oil was relatively a LOT more expensive that currently in the 70s and again in the 80s. The world didn't end then and it won't now.

The US$ has probably depreciated 30% in the last 5 yrs...the value of the US$ is not backed by anything other than good will/reputation since Nixon delinked it from the Gold standard in the 70s...as the US Federal reserve runs the presses day and night each additional $ in circulation is worth a little less..and hence people, quite reasonably, want more of them for their goods...in this case oil.

That and market manipulation caused by security concerns, whether real or imagined, and a supply/demand equation depressed by quite deliberate closing down of refineries and it becomes obvious what the price would likely be except for the dickheads running the planet.:ugh:

The important thing to remember is that along with oil prices going up so has the value of the Australian Dollar compared to the US Dollar. 12 months ago it was mid 70cents, so aircraft spares are also a lot cheaper for airlines now. For every $1000US they spend now, they are $300AUD cheaper compared to 12 months ago

Maybe OPEC should start to trade oil in Euros:D

Oh, I just remembered what happended to the last mob who wanted to do that:ooh:

Operation Iraqi Freedom.:ouch:

Chimbu,

Your comments are spot on. The FED is pumping out dollars to keep the current account defecit in check. Oil producing nations are dragging thier feet wrt output quotas as a higher market rate is required to counter the sliding greenback.

Which leads on to what Jet a Knight says about OPEC needing to find an alternative currency to the greenback. Iraq found out the hard way of what happens when you move beyond the system that ensures US dollar hegemony. Hopefully Iran will take note and abandon its plan for a Euro based bourse.

The sabre rattling in the ME is exclusively about oil. WMD/Nukes have stuff all to do with it. Every CEO of the ruling elite west knows this which explains why so many western multinationals and governments are supportive of military intervention despite any moral misgivings they may have.

........:oh:

I see tiger selling 19.95 fares today, mmmm:eek:

Lot of people talking about A$2 a litre around Christmas, interesting to see how high airlines can get the fuel surcharge up to before pax start to baulk at the real cost of airline travel.

if fuel is $2 a ltr, and im sure it will get there before christmas, then air travel will still seam cheap even with large fuel surcharges.

interesting to see a post on the first page written in November, predicting $46 a barrel in 6 months.... well, its 6 months, and over $120!

Predictions
 

Those who predict the future should be required to wear a wizard's hat and make conjuring sounds over a crystal ball. That way, everybody would know exactly what's really going on and how much credibility to give their answer!

Gentlepersons,

From IATA's website:

As of the 2nd of May, the current average jet fuel price is USD$143.20 per barrel - which is USD$1128.50 per metric tonne. That is a 69% increase on this time last year.

Further, the IATA averaged price of fuel for 2008 is $125.50 a barrel - at which price the cost to the airlines is USD65 billion more than last year - that's USD$65,000,000,000!!!!!

I understand from Qantas' web-site that they've hedged for the next few years at USD$90 a barrel - lucky them!! Spare a thought for the big US carriers who are operating so close to the bone that they haven't got the cash to hedge against fuel prices.

Fuel makes up about 40% of Qantas' operating costs - but for the low cost carriers - like Tiger - it now makes up 60%!! Any fluctuation on fuel price is BAD news for low cost carriers!

Watch the low cost carrier world fall apart in the next 12 months......

Ultralights,
That was Nov 2006. 18 months ago.

Wellconcerned,
Not so sure about that, more likley fuel surcharges will continue to rise so the cost is passed on to the consumer. The airlines who will struggle are those with the older less fuel efficient aircraft. QF must be bleeding about the dreamliner!

Fuel 'Surcharges'
 

Interesting that Air NZ took a hit in court in NZ a little while ago for advertising airfares, A to B, of $X. Then, in small print, "plus a fuel surcharge of $Y and levies $Z". Apart from the fact that the small print significantly altered the cost of the service (and was therefore contrary to the Fair Trading Act), the courts took the view that the cost of fuel was a normal operating cost for the airline and should therefore be included in the published fare. The fine was in the order of $NZ600,000 if my memory serves me. (I stand to be corrected on that figure).

Interestingly, other airlines that had been advertising using the same format were looked at closely by the Commerce Commission (which took the case against Air NZ to court) for possible prosecution on the same basis.

I recently booked international travel for Mrs Old 'Un and me to visit family in Britain and queried the possibility of being hit with a "surcharge" (for fuel cost increases) closer to or at departure date. I was told by the travel agent that this could not happen. A quick check of T & Cs by a legal eagle friend confirmed that there was no mechanism within the contract formed between me and the airline when I paid the fare to allow for such an increase.

He advised that any fare published as "plus fuel surcharge" (in NZ at least) would be skating on extremely thin (legal) ice given the Air NZ case, and further it could be argued that any surcharge would be limited to the rate that applied at the time the contract was made.

Perhaps someone with training in contract law could confirm or otherwise the accuracy of what I have been told.

I guess the bottom line is: be careful of what you're letting yourself in for in regards to any "surcharge" contained in a contract that will not be executed until a date considerably in the future.

Sorry, a bit of thread drift there, but it does relate to the price of oil and how increases affect the aviation community.

Le Vieux

on a bit of a tangent, but still related, in the latest budget, "New" government and increasing diesel fuel taxes from 1st of Jan 2009.

just what the community needs!! with many ppl buying economical Diesel cars, not to mention the inflationary pressure bought on by increaded price of everything transported by road!

smart move....

dont get me started on LPG, Australias LPG is 100% supplied by Bass straight, only 30% is needed locally, the rest is exported!....yet its price is linked at the bowser to the singapore Oil price by the oil companies. !!! LPG prices at the pump vary daily, yet it is actually priced against the Saudi market set price, which is changed only Monthly......

Now it is an interesting read following the debate from last year. Who was that predicting $42, what, about now???