Open Leter to All Airline Customers


#1

Just got this in my email…

Dear Mr. Michael Krause,

Last week, crude oil hit an all-time high of $146, and the skyrocketing cost of fuel is impacting our customers, our employees, the communities we serve, and the economy as a whole. United, and the majority of other major U.S. airlines, are asking our most loyal customers to join us in pushing for legislation to add more transparency and disclosure in the oil markets. Please see the attached open letter from the leaders of the U.S. airline industry.

[quote]An Open letter to All Airline Customers:

Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.

For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers. Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.

Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.

Over seventy years ago, 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. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.

The nation needs to pull together to reform the oil markets and solve this growing problem.

We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.

Robert Fornaro
Chairman,
President and CEO
AirTran Airways

Bill Ayer
Chairman,
President and CEO
Alaska Airlines, Inc.

Gerard J. Arpey
Chairman,
President and CEO
American Airlines, Inc.

Lawrence W. Kellner
Chairman and CEO
Continental Airlines, Inc.

Richard Anderson
CEO
Delta Air Lines, Inc.

Mark B. Dunkerley
President and CEO
Hawaiian Airlines, Inc.

Dave Barger
CEO
JetBlue Airways
Corporation

Timothy E. Hoeksema
Chairman,
President and CEO
Midwest Airlines

Douglas M. Steenland
President and CEO
Northwest Airlines, Inc.

Gary Kelly
Chairman and CEO
Southwest Airlines Co.

Glenn F. Tilton
Chairman,
President and CEO
United Airlines, Inc.

Douglas Parker
Chairman and CEO
US Airways Group, Inc.

[/quote]

SWEET!!! NO DEBUGGING ERROR!!!


#2

Which airline sent it to you? I got it from Delta yesterday and United today.


#3

Every airline listed on it has or will be sending it to all their FF members.


#4

The letter addresses one part of the problem and Congress could act yesterday to fix it. The worthless dollar is a major contributor to the problem. How many dollars did the government print off and hand over to the airlines in the past decade? Everytime Congress bails out the airlines, they devalue our dollar a little bit and they interfere with the free market.


#5

I’ve received it from AA, UA, DL and US over the past few days. Deleted and ignored them all as the nonsense they are.

Yeah, that’s it, oil speculators are the reason for high oil prices.

Not inflation, not the reduction in value of the dollar against almost ALL other currencies, not the fact that other nations are willing to pay more for oil, it’s the speculators.


#6

This is bullsh%t. There is no way that the oil speculators are to blame for rising prices. It is inflation, and a rising demand which supply hasn’t met. The speculators are not to blame.


#7

Yesterday was just United. Today, it is Southwest, AA, Delta, and Continental.


#8

Supplies are almost at an all time high. Explain yourself.


#9

Demand is at an all time high as well and isn’t being met by the supply.


#10

It’s a give and take on both ends. Look at the past 4 days as a perfect example. President Tom (Iran) says “no chance of war with US and Israel” and oil plunges. He shoots a couple of toy rockets in the air, doctors a picture or two, then shoots off one more the next day (probably the one that misfired the first day in the doctored photo), oil shoots back up. That has nothing to do with supply and demand, completely.


#11

Oil has never followed the classic supply and demand model, except during artificial shortages (eg. 1974) and even then it was the supply which suffered not the price - if you could find a gas station open, they charged the regular price.

The speculators are not 100% to blame, other factors do contribute somewhat, but they certainly do nothing to alleviate the situation :imp:


#12

In the past 6 moths, oil prices are up 40-50%

However, in the past sixth months absolutely nothing material affecting either supply or demand has actually happened.

It’s all speculation and while I support free markets, I see it like this:

When traders trade a stock, manipulating its price, they only affect themselves.

When traders trade a commodity like oil and manipulate its price they affect EVERYBODY IN THE WORLD.


#13

I agree. The price has doubled in the lat 18 months while supply has been steady! Demand could NOT have doubled in that short of a time. That only leaves one possibilty - speculation.

The price is a bubble waiting to be popped. When the air is let out, a lot of investors who bought at the top will be ruined. Of course it’ll be your tax dollars that have to bail out the same oil companies that are now raking in billions of dollars of profit :unamused:


#14

Uh…drdisque and Needlenose, the price is up 40% to 50% in DOLLARS, which are worth less and less against almost all other currencies.

Oil is traded in dollars, if the oil owners want to NOT lose money on every sale they are forced to raise the price. Inflation and the steady decline of the US dollar has a great deal to do with the price of oil.

No tax dollars have ever gone to bail out an oil company. The oil companies are making billions in profit because they’re selling more oil than ever before, not because the price is higher.

The average oil company profit on a gallon of gas is .10. That's right, a **DIME**! Whereas the average tax on a gallon of gas (federal and state) is around .48, almost 5 times more. Now who’s gouging you?

World oil demand. In 2007 China manufactured 8.8 million cars and became the third largest manufacturer, after the USA and Japan and ahead of Germany. But that’s nothing! India is expected to overtake China as the world’s fastest growing car market in terms of the number of units sold, and the automotive industry is one of the fastest growing manufacturing sectors in India.

Other nations want oil. Other nations have the money, thanks to US and our addiction to their cheap goods, to pay more for that oil than we’re used to paying. Ergo, the oil flows towards the money.


#15

What goes up tends to go down at a much faster rate.

I see alot of similar manufacturing of water issues. It won’t suprise me to see the same things happen with our water supply in the future.

Federal tax: 18.4cents / gallon for gas and 24.4cents / gallon for diesel
Anybody know the federal aviation fuel tax?
Washington State tax: 37.5cents / gallon for cars and 11cents per gallon for aviation*

*besides financing the beauracracy, the aviation tax dollars go to support aviation/airport projects.


#16

One thing to keep in mind is that the average profit margin for oil companies is around 8%. Relate that to beer brewers who average about 11%, Lumber companies that average about 18%, and, my favorite, hedge funds that average above 60% profit margin.

Yes, the $$$ amount is huge for these oil companies, but in relative terms, the % is not.


#17

Back in 2007, I distinctly remember paying $1.99 for a gallon of gas. I just paid $3.99 for a gallon a couple of weeks ago. That’s 100% increase.

The Euro was at 1 = 1.32 USD at the beginning of 2007
The Euro is now at 1 = 1.57 USD at today’s close.
I agree that the falling dollar does play a role in the upward price of oil, but a 25-cent difference. That accounts for about a 19%

YET! Just wait a while and you’ll see.


#18

… measuring earnings as a share of revenues is not an accurate calculation of return on investment. In fact, when communicating to Wall Street and investors, companies like Exxon Mobil emphasize a completely different methodology to measure profitability, as evidenced by the following excerpt from the company’s 2004 annual report:
Exxon Mobil believes that return on average capital employed is the most relevant metric for measuring financial performance in a capital-intensive industry such as petroleum.

Exxon Mobil’s 2005 annual report filed with the Securities and Exchange Commission shows that that company’s global operations enjoyed a 30.9 percent rate of return on average capital employed. The company’s rate of profit in the United States was even higher: domestic drilling provided a 46 percent rate of return on average capital employed, while domestic refining returned 58.8 percent.

http://www.citizen.org/pressroom/release.cfm?ID=2151


#19

I disagree. The growing countries like China and India are seeing lots of new cars every day. And if speculators are to blame, can you explain why the price of fuel wasn’t spiking?


#20

Are you suggesting that China and India’s rate of increase in the use of automobiles can account for nearly DOUBLE the worldwide oil consumption in a mere 18 months??? Show me some data on that one, please.