Comments on: Airlines Blame Woes on Oil Speculation

By: Jose

Jose — Sat, 12 Jul 2008 00:57:05 +0000

I think there is too much emotion in this post. If airlines were smart, they would stop flying to press public oppinion and government to step in this crazyness. Don’t think they deserve a break? Fine. You will need to swim or walk on your next trip. How’s that for a consequence for not understanding the core problem of this issue? By the way,ALL airlines are suffering. Just there are some like the US ones that don’t count with subsidies like Singapore Airlines.

By: charlie

charlie — Fri, 11 Jul 2008 20:53:31 +0000

There is a difference in commodity trading when people end up using the product and when people are just using oil as a crutch for the US dollar. Yes, it is whining but the airlines have a point (although nobody cares). If the airlines were smarter they would be asking the GCC countries to stop using the dollar as a benchmark.

By: onlinetravelreview

onlinetravelreview — Fri, 11 Jul 2008 15:49:21 +0000

I think the backlash against the airlines and their anti-speculation crusade just shows that at this point nobody believes a word they say.

By: iahphx

iahphx — Fri, 11 Jul 2008 15:20:18 +0000

I think you’re mixing apples and oranges here. Of course airlines are not interested in reducing margins in their industry through further international competition (although note that some might be receptive to more foreign ownership). I mean, this is human nature — one does not to reduce the profitability of one’s business.

This does not make their complaints about oil speculation illegitimate, however. There is something terribly wrong with oil pricing these days. As one Senator put it, it is an orgy of speculation. Today, for example, oil went up 5 bucks on an obviously false rumor that Israeli warplanes were stopping at Iraqi air fields for some inexplicable reason. In the past year alone, oil prices have doubled (and are up 500% in the past 5 years) even though demand is now falling and supplies are stable.

In other words, the oil market is trading like a hot NASDAQ stock. It is a bubble like so many other financial bubbles we have seen in recent years. It is destined to pop. The problem for the airlines is that they may all go broke (except perhaps Southwest) before the bubble pops. Is that a good idea?

I think it’s nuts, and I think the industry is doing exactly what they should be doing here. I wish more people in America would support them, because the speculation in oil is destroying our economy, enriching a bunch of global SOBs, and killing our airlines and air service in America. And the primary reason is speculation.