Says the non-pilot on a airline pilot forum. Shouldnt you be on some financial forum talking about how great oil speculation is? :cool:

non-airline pilot...
kick me off then - but i've got bonifides :). there are plenty of pilots right now who aren't presently airline pilots with the current condition of the industry!

Haha! Now thats funny...

Or put American Eagle on there and people will say "Liiikkeee, i dont get it.. why does a clothing company care about oil so mucccchh... i meaaan, pleease!"

That's not by choice, but by necessity. Just because those "airline pilots" aren't airline pilots currently, that doesn't mean they don't still have financial responsibilities.
I don't think you understand what it's like investing approximately $80,000 to $110,000 into a career only to see any hopes of a stable income being swallowed up by the market. I realize I am not a market analyst, and you may very well understand the stock market dynamics a hell of a lot better than me. That being said, somebody is making alot of money off of this and when most companies point that blame towards speculators, I tend to agree.

Agreed, i find it pretty ironic that the only people that say it isnt speculation are the financial institutions and investors that are making lots of money by speculating. Oil is the one thing right now in the market they think they can count on to continue going up. The more the financial institutions tell everyone that oil will go up and hit 200 a barrel the more that gets investors to buy in, raising the price. If someone said they had the lotto numbers for tomorrow would you go buy a ticket? Except this particular lotto ticket carries with it the effects of destroying our economy and industry :cool:

Bottom Line is SOMEONE or SOME GROUP is making money from all this. If the entire country is paying for such an enormous price for fuel, that money has to be going to someone.
Like I said, I'm not an expert, but if the majority of fuel is traded 10-15 times before any physical delivery is taken, do you really need to be an expert to see what's going on.

bbtp,
I'm not sure what you do for a living, but imagine one day your bottom line dips steeply in the red because all you finances are being swallowed up by your production/service costs. Right now, airline pilots are just a large slice of the American public who in a few months won't be able to afford to drive to work anymore.

i do understand - i invested a huge chunk of my life (as well as a smaller chunk of cash on the backside) in the whole pilot thing. that's all a sunk cost - there's nothing i can do about it now other than savor the good memories. now i'm doing something else, because is makes sense for me and my family (both financially and otherwise).

you're right - pilots have "over-invested" in training for the "promise" of out-sized wages. union-driven wages do that by their very nature - when you demand (and get) a wage that is above the natural "market-driven" wage, you lower the rate of employment. this isn't the fault of "the market," it's a consquence of the laws of economics. there's nothing anyone can do about it, short of the government deciding it's going to subsidize pilot salaries (which would have its own negative consequences - and I think most would agree a pilot subsidy would be unfair to every other profession).

the "promise" of high wages was evaporating long before the price of oil boomed. the dramatic rise in the price of oil has only accelerated what was already happening. it's nice to be able to blame someone, but in this case, blaming the speculators is blaming ghosts.

So just to be clear here, You are saying Speculation has NO effect on the spike in oil prices? :cool:

Personally, I would like to blame oil speculation or some greedy hedge fund manager, but realistically I don't know enough about how it all works to say that. I do feel, however, that someone is profiting off of all this while the economy suffers.

Government regulation, by association to deciding a pilot's salary, is a double edged sword in my opinion. The government can provide a stable industry, but the downside to that would be a lot less jobs.
I think their needs to be a delicate balance here, as well as a way of controlling operational costs. Airlines today are continuously gambling on the hopes that fuel costs will not surpass their profit viability.
Hedging is just buying airlines time and money in the grand scheme of things.
I think a big part of the problem was largely due to the fact that oil prices had been so cheap in this country for such a long time that everyone took it for granted. The Ultra-Low cost of fuel never gave people a reason to limit or control their consumption, until today that is.

The government has worked so hard to prevent any one company from monopolizing a industry, Sirius/XM, DAL/NWA, and Microsoft just to name a few. My question is how come oil companies don't seem to have as many legislators restricting their growth?
If I had to venture a guess, I'd say corruption, but again that's just a guess.

Money looks after money, always has always will. Problem today is that the hard work, dedication, and commitment of the many is used to fund the wealth and greed of the few anyway you look at it.

That's more or less true in a well regulated open market. The key is transparency. The Hunt Bros tried to corner the silver market, when other speculators saw the huge position the Hunts held they realized the price was artificially high and they dumped their holdings. The Hunts were burned to the tune of $2Billion. Thats the traditional risk to cornering the market. What happens if non traditional players with massive amounts of money enter the market? Now add in a market where there is no transparency, i.e. you can not see who holds what or who's trading with whom. You get wash sales. What if these new players, all playing the same game (a herd mentality where no one company corners the market but as a group they have), own 70% of all existing futures contracts? As they trade amongst themselves (no risk in a wash sale) they are holding these contracts out of the market( artificial limiting of supply). The true speculator (who intends to take delivery) must enter the market and bid for what is available at that time. He must his business requires it. Thats trucking companies, airlines, refineries, etc. With these daily trends he can not sit back and hope that fear of a contracts expiration will cause a drop in price. Oil in normal trading is far to liquid for that. I'll show you that supply isn't the issue, I'll show you that the weak dollar doesn't cover current price either. What have been the effects of the Commodities Modernization Act? Why does the Intercontinental exchange exist? Who trades there and why don't those investment banks etc trade on the NYMEX? Please don't throw out cheap easy stuff like it's the fault of leftists, environmentalists, or the scapegoat of politicians. Stick to the point and explain the price.

opposing view
 

This is still a FREE country and people are still Free to choose where and how they want to invest their hard earned dollars and if they want to speculate then so be it ,once we start to dictate and punish others on how they choose to invest then we have over stepped our bounds as a Free society and when and if that happens I,m outta here and on my way to the polynesian islands :)
I,ve said it in other posts and I, ll say it again .
We have no one to BLAME but ourselves for this mess we are in ,30 years we sat on our assets and did nothing and now that the chickens have come home to roost we want to blame others for our short falls I,d say that was a bit selfish and pathetic to say the least .




You make your bed and you lay in it !


God how I hate the 21st century !

I believe speculation plays a very minor role in the oil prices we're seeing today. Supply is the fundamental issue, it's just that the tight supply has induced a sort of paranoia that causes $5-10 swings in the price of oil. Less than a week ago there was a fleeting sense of optimism that oil prices were receding...down to a bargain buy @ $136/bbl fueled by rumors that the American dollar was getting stronger (false) and that supply for the week was greater than expected.

Then the Iranians tried to flex their muscle(which they don't have), fired some test missiles, concerns re: supply were exacerbated by "what if" scenarios concerning an interuption in supply from the middle-east due to a full-scale war w/ Iran. So oil shot back up to $146/bbl.

In my view, these minor swings are the net result of speculation. The fundamental is that supply is tight, production has peaked/flattened out at about 85 million bbl/day give or take a million, and demand is skyrocketing worldwide due to impressive growth figures out of China and India...China still growing about 8 percent/year, that requires quite a lot of oil to sustain. There are also some other emerging countries/economies that are straining the system. In other words, more and more countries are competing for those 85 million/bbl of oil per day, which will necessitate price increases across the board. Don't need to be an economist to figure that out.

The net price of oil will remain high. I believe this is attributed to the fundamentals of supply and demand/production capacity. In adopting a nuanced view, I do think speculation plays a small part in the rise and fall of prices...just not as large a part as production capacity vs. supply.

How is this relevant to our thread? The way I see it, most of this info. has been around since the 1950's. We all knew these days would come, we just didn't bank on it happening during our lifetime. Well, they're here, our CEOs had ample time to mitigate the consequences...that's why they get paid the big bucks, right? No whining, no excuses, they did a terrible job of managing so many of these airlines. But of course, they can't take responsiblity for this, so they sign a form letter and turn to their main lobbyist in Washington, the Air Transport Association, to try and make it look like none of it was their fault. I don't blame the CEOs for the price of oil, but it is their job and duty to lead the airlines through these difficult times, not point fingers and make excuses.

Personally, I think a bunch of the CEOs on that list should be castrated so their kind don't muck up anything else...a little harsh, but that would certainly be more effective than a form letter to the public.

haha - we can move to the polynesians... or... the people that don't like living in a free country can move to venezuela!

Just went there and sent my letter off. It only takes a few minutes and it has very easy intstructions.