WHINING AND HOPING FOR CHEAPER OIL IS NOT A STRATEGY

IS OIL MARKET SPECULATION INCREASING PRICES?
AIRLINE EMPLOYEES URGED TO UNITE AND PETITION CONGRESS


We’re sure that many of you have had the opportunity to read the open letter addressed to all airline customers concerning the rampant speculation in the oil commodities market. There is a feeling, especially among airline execs, that this speculation has added severe price increases to the cost of a barrel of oil.

The letter states that “some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.” We don’t know about the validity or accuracy of that number and suspect that it is much closer to only $5 to $10 dollars a barrel as most reputable analysts have estimated.

Either way, petitioning congress for redress of the issue is not without merit or usefulness. We support the activity and agree as the letter states, that “Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed.”

Probably removed by big business friendly governments who were bending over backwards to allow corporations to manipulate markets and increase the value of stock, enriching fat cats, major shareholders and corporate officers. It must suck to be slapped by the hand that has been feeding our executive leaders for so long. Wow, talk about karma! Maybe it’s time for a little airline re-regulation as well. Add that to your petition!

Anyway, let’s all take a deep breath and look at the realities of our situation. This world has finally reached peak oil. As many of you know, peak oil means that the demand for oil has exceeded the available supply. Most experts believe that we are never going to go back to the old days of supply exceeding demand. That means simply that $100+ per barrel of oil or $4 dollars a gallon for gasoline is here to stay… forever.

Here’s why that’s the case; even if Americans learn to conserve and our cars magically, over night increase their efficiency by 20 miles a gallon, prices will stay as they are. This is because the world has emerging markets that need the oil and are willing to pay whatever the costs; the Chinese are projected to have, within 10 years, 400 million cars on their highways consuming finite oil. India's market with 1 billion consumers is rapidly joining the burgeoning ranks of people who want to experience the good life.

What can we do, as airline employees, about the world wide competition for oil? We can demand that our leaders have solid, long term strategies that take into account world markets and understand political dynamics; leaders that have a world view, not just a year over year strategy that fattens their own wallets. Some airlines, such as fully-unionized Southwest, have these kinds of dynamic leaders with vision and long term plans.

While our leaders spent their time after bankruptcy planning a merger that is projected to cost over a billion dollars of our precious cash, fully-unionized Southwest was busy hedging 70% of their fuel costs at $51 a barrel well into 2012. They know what their costs will be and because of their superior planning, will be able to watch as we and other legacy carriers weaken and perhaps fall. Having comparable fuel hedging strategies at Delta would have saved us, this year alone, 2 to 3 billion dollars; easily paying for the cost of this merger.

Picking up the pieces of broken and beaten airlines will be Southwest’s future. Our future will only be protected by organizing and unionizing. Our leaders’ mistakes will have to be paid for and in the past, we are the ones that forked over the millions to cover their poor planning and lack of vision. Not this time.