Originally Posted by
Frozen Ronin
I don't read much chatter on oil prices, these days. The airline growth and low ticket prices were influenced greatly by OPEC's attempt to put the squeeze on domestic oil producers. This happened by dumping oil into the market at reduced prices. It caused domestics to scale back exploration and infrastructure investment, and the smaller outfits to close down. They are waiting for their time to cut production (prices jump). This won't be a blip on the budget sheet, this will be in a large scale, bottom line shakes thing, if history repeats itself. When this happens, tickets go up, ridership falls, airlines scale back and the pendulum swings the other way. I can't help but feel this is left out of so many conversations it belongs in? Sometimes I can't tell if I'm being old (cynical) or wise....
(Largely in terms of the automobile industry):
One thing to keep in mind is that the next time oil prices are abnormally high for too long (because I agree with you, history does repeat itself), there will be more strength/pressure that private industry and government regulation can have through leveraging investment (and purchases) in electric technology. This will help counteract any
sustained massive price hikes. SUV/truck sales have been outpacing cars for a long time now, so a dramatic rise in oil prices will scare a lot of SUV/truck owners and shift that pendulum back to cars... possibly electric cars. OPEC won't want manufacturing companies to shift their production lines back toward electric vehicles (or 'attempting' to produce as in the Chevy Volt debacle).
If OPEC is smart, they won't spike the prices too drastically for too long as a way to fend off a shift in buying trends. They'd be shooting themselves in the foot. It's not 2003 anymore where people were starting to seeing occasional hybrid and electric cars on the road. Electric vehicles can now be a real threat to traditional vehicles. Sort of like when you have the best hand in poker... you don't go all in if the other player is going to change their betting strategy and fold. Instead you milk them for as much as you can for as long as you can.
IMO I find it hard to imagine oil prices spiking to a level that it causes a massive and sustained impact to aviation; it will take a large combination of economical pressures to suppress the need for pilots to the point of zero hiring and furloughs. I see oil prices going back up, but if it's the only economical factor it more than likely
will just be a blip on the budget sheet for a few years.