Oil Surges above $85/barrel
 

Oil surged above $85 a barrel today.
http://biz.yahoo.com/ap/071015/oil_prices.html
Since I have made this prediction, oil dropped below $60 a barrel only once...for about one month's time period. It will never go back. High oil prices are here to stay.


Time to start buying hybrid cars. Time to stop investing in that ethanol fuel crap, and time to start investing in true renewable energy (solar, wind, hydro, but especially solar) and batteries capable of storing enough charge to power an automobile at a decent range at a decent speed.

What will be interesting is to see if ALL the passenger carrying airlines do some sort of price increase to offset their additional costs. Hopefully they'll have learned from past experience.

Time to start drilling for our own friggin oil. There is more in Alaska and the Gulf of Mexico than all of the Mid East. It's time to start building new refineries too. OBTW, hybrid cars are terrible for the enviroment. They take more energy and cause more pollution to make than normal IC cars. And what are we going to do in 10 years when we have to dispose of all those batteries? We have solar/wind powered airplanes. They are called gliders! Sure is hard to cross the ocean in a glider though.

ok off the soap box. :)

The one year projection for oil is around $110 per barrel. If true, things will change in the industry for passenger carriers, the margins are simply too thin to absorb this magnitude of energy expense increase.

Cargo carriers will feel the pinch although they generally have more "revenue units" in the back to distribute increased cost without losing significant market share. The trucking component of each of the major cargo carriers could negate that hedge.

I'll shut up before I start sounding (more) like an analyst :p

As oil prices increase alternatives will be come much more viable. By letting prices get to $110 a barrel they're shooting themselves in the foot in the long term. Shale oil and other alternatives suddenly look much more cost-effective which will chip away at any bennefit to high oil prices.

And no, Ethanol isn't the answer. Corn crops were horrible in the US this year because of widespread drought conditions across the midwest and the flooding in Kansas and Oklahoma in the early summer months. Food prices would be severely effected by a dramatic rise in corn prices which would cripple the economy.

As far as the airlines, AA announced they're increasing their fares by $5 on routes not contested by LCCs. So that means they're raising them on about 3 routes. Recent years have proven that airlines would rather bleed to death than charge a fare that actually allows for the cost of that seat to be accounted for.

One could also draw a parallel to the cyclical nature of oil and the airline industry. We've seen high prices before (embargo, Gulf War I) and they have stabilized and dropped.

Instead of prolonging the inevitable, why not just put that time, energy, and money into a long term solution? Sure we could drill that oil, but we will just end up in the same situation in a few years anyways.

I agree corn ethanol is not the way for the US - Beef is up - and anything else that uses corn -

Brazil did it with just cane - we can do it with scrap wood, cut grass, our abundance of sugar cane etc....

Problem is all the infrastructure is inland to distill it and the majority of consumers live about 4 hours from any coast (or at least the fact that I was quoted).

And I wanted to buy a Barron - Guess I need to keep the 172 and when new engine time - put the diesel on it ;)

Don't worry guys and gals, they'll just take it out of our pay or benefits, or something, just like they always have. Our customers should not have to endure ANY fare increases due to the high cost of oil- that's our job! Just ask your boss/CEO/COO/D.O (whatever they call themselves)- "it's a privelege to be a pilot at xxxxxx Airlines, not a right!" -He/She will tell you.

hybrid cars are a joke.....the energy footprint to build and sustain one exceeds that of regular fuel vehicles. that electricity has to be produced somehow and it all leaves a carbon foot print.

Price of oil is high... but I think you will see some fall back over the next 6 months......

I would not want to be on the bottom of major's seniority list as a newhire with oil going through the roof and LCCs cutting fares.