Re: Airlines To Cut Flights, Ground Planes, Raise Fares
There are several reasons for the dramatic increase of gas/oil prices...
1.) Market speculation... is adding approximately 20%-30% onto the price. Due to the fact that the Fed has cut interests rates, the dollar has become devalued and investors are looking into commodities as a substitute. Once the interest rates are no longer being slashed nd are raised (once the credit crisis is effectively over) watch for the dollar to rebound and the oil bubble to pop... a little.
2.) Refinery production... operating below the peak capacity that is needed at this time of the year.
3.) Supply difficulties... tensions in the Middle East and Africa have raised fears of attacks on vital pipelines of oil.
4.) Reactionary investors... an oil tanker gets attacked by pirates off the Arabian Peninsula and oil jumps $2 a barrel. Was that jump warranted? No. Weekly accounts of oil and gas reserves come in a little low and oil jumps $3 a barrel. Was that jump warranted? No.
5.) Developing markets... Russia, China and India are consuming record amounts of crude oil... supply and demand. Price goes up.
6.) OPEC... it is their right to release and supply as much or as little as they want.
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