The effect of high oil prices on aviation

[60N]

hey everyone. Turned on ROB this morning and saw that C$ has reached $1.10 US before falling back slightly. Most of this is a direct result of the price of crude oil. With a barrel flirting with the $100.00 barrel mark, just wondering what everyones thoughts are with regards to aviation. In any case it is going to hurt sooner or later if companies haven' t hedged their fuel costs. Just throwing it out there for discussion.

[Panama Jack]

Inevitable, sooner or later. The days of cheap energy are history. More fuel efficient airplanes will become more attractive, while older thirstier ones become ugly on the bottom line. I expect that this will have a slowing effect on the economy, since oil is the blood of society and economy, and increased prices will be seen pretty much everywhere.

Individuals and industry will plea Government for tax breaks to offset the costs, Government may well be tempted in order to remain on the winning edge of this popularity contest that we call "Democracy."

Overall though, our way of life is unsustainable. Alternate energy sources must be found, and high costs provide the incentive for people to take this more seriously. However, there will also be a need to "reduce and recycle"-- public transit may become more attractive (although in most parts of Canada public transit is inconvenient and costly) and people may travel more. The internet and cheap telecommunications will reduce the need for "face to face" contact, and I think people will travel less on leisure-type trips, simply because it will demand a higher percentile of their budget.

Is it the death-spell of aviation? No, I don't think so, however, changes will definately be felt, but overall, economics will continue to rationalize aviation as other industries so long as Government doesn't get too involved into tipping the scales, and creating an even bigger mess.

[North Shore]

Google/wiki "Peak Oil" and try not to lose sleep...

[60N]

Katie Curic just announced on the CBS evening news that United Airlines is considering parking up to100 aircraft due to the cost of fuel. That kind of fever can spread very quickly. I hope it doesn't come to fruitition.

[v6g]

Sadly, I believe that aviation will be the first industry to collapse with the rising oil price. There's no other industry so wholly dependent on cheap oil. Although it is important to acknowledge that much of the current increase in oil price is directly due to the weak US dollar.

Ironically, it might create a mini-boom in certain parts of the Canadian aviation sector as the escalating price encourages more prospecting.

[Dust Devil]

From my point of view it's great. I run on dry contracts so my customers are picking up the added cost of fuel and the strong canadian dollar is helping me in making upgrades to my aircraft. Good times ahead!

Oh did I mention the NDP is getting tossed out of this province tonight? The news keeps getting better!

[Alex YCV]

Katie Curic just announced on the CBS evening news that United Airlines is considering parking up to100 aircraft due to the cost of fuel. That kind of fever can spread very quickly. I hope it doesn't come to fruitition.

It's part of the process of price correction. Yield management often leads airlines to sell more and more seats cheap in order to keep up with capacity. At some point, when the costs of flying go up dramatically, you have to stop selling cheaper seats. The only true way to accomplish that is less seats and less unprofitable routings.

If nothing else, this may be a continued boom for smaller commuter airlines.

[planett]

Remember that efficiency is the cause of increased consumption. Savings or additional profits from efficiency improvements are reinvested in more vehicles to improve market share, since stable market share or no growth is considered "failure".

More vehicles (airplanes) equals more demand for fuel. You know the rest of the story.

Apply this to shipping, railway, trucking, and avaiation, and then consider China and India attaining first world lifestyles.

[Walker]

Out of curiosity is anyone trying to build a turbine that is certified to run on Biodiesel? considering the speed this industry moves at, I would imagine it wouldnt be a bad idea to start doing the leg work on some such program....

[Dust Devil]

Out of curiosity is anyone trying to build a turbine that is certified to run on Biodiesel? considering the speed this industry moves at, I would imagine it wouldnt be a bad idea to start doing the leg work on some such program....

I prefer the smell of jet to french fries

[goates]

Out of curiosity is anyone trying to build a turbine that is certified to run on Biodiesel? considering the speed this industry moves at, I would imagine it wouldnt be a bad idea to start doing the leg work on some such program....

I prefer the smell of jet to french fries

And I think that most people would prefer cheaper food. So far biofuels, at least the ones based on corn, have succeeded in jacking up food prices in places like Mexico. Nothing like making it harder for third world countries to feed themselves. Seems like a case of the cure being about as bad as the disease to me.

[22l]

Turbines can run on modified biodiesel, one problem is keeping the fuel from freezing. Im not sure how viable all this may be for it takes fuel to farm and produce it.Dont know the ratio or how efficient the hole process is

[Alex YCV]

Out of curiosity is anyone trying to build a turbine that is certified to run on Biodiesel? considering the speed this industry moves at, I would imagine it wouldnt be a bad idea to start doing the leg work on some such program....

I prefer the smell of jet to french fries

Can you imagine KFC pushing to get their oil used so everyone will be hugry by the end of the flight?

[North Shore]

I'd read somewhere that boeing was in on a test program to fly a 747 around, fuelling one of the engines on some sort of biofuel. Whether it was a 100% bio, or some sort of blend, I'm not sure, and what sort of biofuel wasn't made clear.
The temperature problems of biodiesel are quite easily solved, I'd think - some sort of heating element in the fuel cell would stop gelling..lots of excess heat in a jet engine

[pitot]

Wow, North Shore You weren't kidding about that whole peak oil artical. A person doesn't think about all that stuff. Pretty tough to fly a plane for a living when there are no planes to fly!

[v6g]

The trouble with biofuels is they displace food production. The world grain harvest surplus has been declining consistently over the past two decades and is now almost zero. But it's easier to make third world countries starve than it is to stop Canadians & Americans flying in planes and driving SUV's.

[stopsquawk]

It's sobering to think of the effects of decreasing oil production on the flying industry. This won't be the only industry affected however, and a lack of flying jobs will be a moot point in the larger picture as our oil dependent lifestyle and economy changes over the next twenty to thirty years. Rent the movie "The End of Suburbia" for a look at things to come.

[goldeneagle]

The problem with paying attention to oil prices, everybody thinks it's gone WAY UP when they hear prices nearing $100us for a barrel of oil today, that same barrel was only $50 a couple years back. What they forget, that us dollar was worth $1.50 cdn back then, and is worth $0.90 today.

The price of oil isn't really rising much. The value of the us dollar is going down the toilet when measured against just about any other currency, even moreso measured against canadian currency which has been one of the stronger currencies recently. When the us dollar takes a 3 percent dump (which its done time and again recently), the price of oil 'appears' to go up by 3 percent, unless of course you are buying it with canuck bucks. Then the price looks pretty stable.

There was a move afoot some years back to shift major oil markets away from the greenback, and into trading oil using the euro. One major producer actually started refusing $us for the stuff, and insisted on the euro as payment for oil. ofc, we all know what happened next, that producer was iraq. An attempt to move thier economy away from dependance on the greenback resulted in, well, no infrastructure left to drive what is left of the economy.

If you are really concerned about the price of oil, go measure it in canadian dollars and euros. Then, take a look at the money trail that ultimately funds your paycheque, and ask how dependant it is on sales into the US market. If the money trail feeding your paycheque isn't dependant on US sales, then the tanking US economy wont affect you to badly, probably good times ahead. If your money trail is dependant on sales into the US market, then it's long past the time you should be looking for alternative markets, because thier money is only worth about half of what it was just a few years ago, and that's reflected in raw commodity pricing around the board. Oil is just the high profile visible one that everybody pays attention to on a daily basis.

[newpilotwife]

The trouble with biofuels is they displace food production. The world grain harvest surplus has been declining consistently over the past two decades and is now almost zero. But it's easier to make third world countries starve than it is to stop Canadians & Americans flying in planes and driving SUV's.

They don't just displace food production, in the Pacific region primary tropical forest is being felled to grow biofuel crops

[v6g]

There was a move afoot some years back to shift major oil markets away from the greenback, and into trading oil using the euro.

Indeed, that is what Iran has been suggesting they might do.

[xsbank]

Biofuels actually cause more emissions than fossil fuel. Never get something for nothing.

I think the high dollar will spell the end of this little boom we are in. How many of you rely on tourism from foreigners? How many of you support lumber and fishing? How many maintenance outfits were servicing offshore a/c (Cascade?). Yes, more Canadians will want to travel, but less of them will be employed as shoppers head south, buyers go to other countries and all those manufacturing jobs that are still here and not in China, are lost. How about the film industry? London Air?

Everybody have a seat?

[North Shore]

Biofuels actually cause more emissions than fossil fuel. Never get something for nothing.

xs, I think that it depends on which biofuel you are talking about, and from what feedstock it is made.. Ethanol from corn (the big favourite in the USA right now) is more of a subsidy to farming than a solution to either a) oil shortages or b)co2 emissions, as it needs more oil to produce than energy it returns - and likewise emissions. OTOH, thre's a company out of Ottawa (bio-gen? syn-gen? something like that..) that is working on a method to make ethanol out of cellulose - so, corn husks, straw leftover after the grain is havested etc...if that works, then the balance might be tipped. Likewise bio-diesel, which currently is produced in North America from Soya bean oil. The protein from the beans is used to feed cattle, and the oil is dieseled. If crops were grown strictly for oil content, then there are much higher yield plants in terms of litres/acre. That being said, there is some interesting work being done by a guy called Mike Briggs at the University of New Hampshire about getting oil from algae grown on ponds...
Interesting times ahead, though..

[goates]

Biofuels actually cause more emissions than fossil fuel. Never get something for nothing.

xs, I think that it depends on which biofuel you are talking about, and from what feedstock it is made..

And apparently the Brazilian method of using sugarcane is very efficient as well. If they can use the waste from farming, biofuels are a good idea. It's the ones where they use the food itself that aren't a good plan.

[Four1oh]

the only people who benefit from 'growing' biofuel is the farmers... and guess who Bush wants the votes from? It's a goddamn scam, pure and simple. And only a fucking simpleton would think that growing food to convert to fuel is a good idea. There are other alternatives, but unfortunately there aren't the lobbyists to make it happen.

You can make biofuel out of almost any waste... think slaughterhouses, think manufacturing byproducts... think garbage.

[Dust Devil]

the only people who benefit from 'growing' biofuel is the farmers... and guess who Bush wants the votes from? It's a goddamn scam, pure and simple. And only a fucking simpleton would think that growing food to convert to fuel is a good idea. There are other alternatives, but unfortunately there aren't the lobbyists to make it happen.

You can make biofuel out of almost any waste... think slaughterhouses, think manufacturing byproducts... think garbage.

god forbid something benefits farmers