Wednesday, November 7, 2007

Oil...............What Else Can You Say? OUCH!!!!!

Light sweet crude, which retreated after striking the record high of $96, is back up to $96. On the heels of an “output suspension” by Petroleos Mexicanos, Mexico’s largest oil company, most traders expect a disappointing Energy Department inventory announcement tomorrow. The general assumption is that without Mexico’s help, the U.S. will struggle to maintain inventories.
Last week, the inventory report shot crude futures up $4 per barrel. Look for tomorrow’s report to do the same.
And we’ve got a new fuel topping the “all-time” list. Diesel fuel prices hit an all-time high this morning. With a national average price of $3.30 per gallon, diesel has never been so expensive -- even adjusted for inflation.
Prices for both unleaded and diesel each rose about 14 cents last week alone. Unleaded prices, at an average of $3.01, are about 20 cents short of their own all-time high. In October, prices rose an average 25 cents per gallon across the nation.
Rising fuel prices have finally caught up with the airline industry. American Airlines has announced a $20 fare increase on all U.S. round-trip flights. The airline cited rising oil prices as the sole driver behind the hike.
AA’s hike comes on the heels of almost every major airline hiking prices in October. Continental, Delta, Northwest, US Air, United, AirTran and Alaska Air have all hiked prices by a similar margin.
And who can blame them… American Airlines recently told the LA Times that a 1 cent/gallon increase in the price of jet fuel adds $30 million to its annual expenses. Officials at American also guessed that the rise in crude oil prices since “the summer” will cost the company more than $1 billion.
Last week, the Air Transport Association estimated higher fuel prices drove second-quarter costs up 5.6%... double the expense that airlines suffered the same time last year.

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