Oil markets causing volatility in oil prices and distortion in crude prices
Airline execs are focused on the punishing cost of flying and are starting to blame oil speculators for driving the price of fuel skywards. Driven simply by an urge to profit from trading, oil markets are pushing fuel prices higher than they should be. A new lobbying group, the Stop Oil Speculation Now coalition, has been created in the US by Delta Airlines – the biggest consumer of jet fuel in the world – and the Air Transport Association as well as 98 companies and trade groups.
The weak US and European economies need low oil prices to aid the recovery. Airlines struggle to stay profitable.
Delta hedges around 50 percent of its fuel costs. Whereas airlines once dominated the futures market, where oil is constantly bought and sold, today financial players – investors like pension funds, which never actually use barrels of oil – are dominant. However, financial players disagree, arguing that oil was priced too low for too long.
The Sacramento Bee