Tag: speculation

Turbulent Fuel Prices Hit Airlines Hard

  • Airlines say that there needs to be more regulation on oil speculators. (Photo courtesy of NASA)

Recent swings in the price of
crude oil are leading to more
trouble for the US airline
industry. Rebecca Williams
reports:

Transcript

Recent swings in the price of
crude oil are leading to more
trouble for the US airline
industry. Rebecca Williams
reports:

Even though oil futures are trading for half of what they were last summer, the airlines are not happy.

David Castelveter is with the Air Transport Association. He says wild price swings for oil make it tough for the industry to plan ahead.

“They hedge their fuel purchases when the price is high at a lower rate and if the price of fuel goes low then they’re hedged in at higher rates and it costs them money.”

Airlines would like to raise ticket prices, but, with the recession, they’re worried no one will buy them.

So instead, they’re trying to cut back on how much fuel they use. Airlines are retrofitting planes with winglets that cut fuel consumption.

But that takes money and time. So in the meantime, they’re also cutting jobs and routes.

The industry’s putting pressure on Congress to force more transparency in the oil futures trading market.

They’re hoping more regulation on oil speculators would mean fewer price swings.

For The Environment Report, I’m Rebecca Williams.

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Speculators Cause Spike in Oil Prices

The price of a barrel of oil has jumped
up from $45 to nearly $70 in just
three months. And gas prices have been
creeping up too. Rebecca Williams reports
these prices are out of sync with the usual
rules of supply and demand:

Transcript

The price of a barrel of oil has jumped
up from $45 to nearly $70 in just
three months. And gas prices have been
creeping up too. Rebecca Williams reports
these prices are out of sync with the usual
rules of supply and demand:

Right now there’s a huge glut of supply of oil – and at the same time, weak global demand for it.

Ruchir Kadakia is a global oil market expert. He’s with Cambridge Energy Research Associates.

He says speculators are driving oil prices up.

“People believe that with positive economic growth in the future there will be greater demand for oil. So they start to buy up oil in anticipation of that demand recovery.”

So these speculators are making money while most of the economy is in a slump.

But Kadakia thinks the realities of supply and demand will eventually catch up and drag oil prices back down.

“The pain we’re feeling at the pump today is probably going to be the worst we feel all this summer.”

He thinks gas prices might actually get back below two dollars a gallon.

For The Environment Report, I’m Rebecca Williams.

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Greens React to Bush Re-Election

  • The re-election of George W. Bush has many environmental groups worried. (Photo by Judi Seiber)

Environmental groups worry that the Bush administration will further dismantle environmental protection laws during its next term. The Great Lakes Radio Consortium’s Lester Graham reports:

Transcript

Environmental groups worry that the Bush administration will further dismantled environmental protection laws during its next term. The Great Lakes Radio Consortium’s Lester Graham reports:


The big environmental groups have been very critical of George W. Bush’s first term in office. Despite speculation that the President will take more moderate positions in this next term, environmental groups such as the Natural Resources Defense Council are skeptical. Greg Wetstone is the NRDC’s Director of Advocacy.


“We have to prepare for the worst and we’re hoping for something better. We would like to see this president use the election as an opportunity to embrace more broadly the support for environmental protection held across the public. But, we can’t be naïve.”


In a letter to NRDC’s members, the group’s president took it a step farther, writing that -quote- the White House attacks of the past four years are but the leading edge of a much broader assault that will come in a second term. Other environmental groups are expressing similar skepticism.


For the Great Lakes Radio Consortium, this is Lester Graham.

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