Oil price fuels fears of further turbulence
Richard Edwards
1 Comment
High fuel prices are hitting industries across the board, but the airline industry is bearing the brunt of the soaring cost of oil. As recently reported by ELP, British Airways has already warned that their margins have been decimated by increased fuel expenditure, and now another major airline, Delta, has illustrated the potentially devastating effect the rises seen in the past 12 months have had and, in all likelihood, will continue to have for the foreseeable future.
The third largest carrier in the US has said that it hoped to cut at least 2000 jobs through a voluntary redundancy scheme, after it claimed that its fuel prices had risen a staggering 20 per cent in the past three months (the airline, like many others, bases its jet fuel budget at $90 a barrel levels, figures which are, quite literally, pie in the sky in the current environment).
Coming at a time when customer numbers are on the wane courtesy of the economic slowdown in both the US and Europe, it’s small wonder that airlines, like their passengers, are preparing to tighten their belts in anticipation of further turbulence.
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Reader Comments (1)
Now other notes start dominating. After months of records the oil and gold prices have toppled over dramatically. American policymakers are panicking. The FED seems to be reacting instead of directing. Their economy appears to be shrinking already. All these goings-on doesn’t leave the rest of the world unaffected. And, last but not least, suspicion grows that the raw material markets are victims of the kind of speculation that has also ruined the credit market.
In one week I heard the forecast of two different oil experts. One predicted that the price of a barrel of oil could well be $150 by the end of this year. The other didn’t find it unlikely that it would be around the cost price of a barrel, $50-60. I wouldn’t know. Just yet, the best motto seems to be to live by the day.