"An Open Letter to All Airline Customers"

[Friday]

First, an excerpt from Wikipedia's page on fascism:

Fascists opposed what they believed to be laissez-faire or quasi-laissez-faire economic policies dominant in the era prior to the Great Depression.[100] People of many different political stripes blamed laissez-faire capitalism for the Great Depression, and fascists promoted their ideology as a "third way" between capitalism and Marxian socialism.[101] Their policies manifested as a radical extension of government control over the economy without wholesale expropriation of the means of production. Fascist governments nationalized some key industries, managed their currencies and made some massive state investments. They also introduced price controls, wage controls and other types of economic planning measures.[102] Fascist governments instituted state-regulated allocation of resources, especially in the financial and raw materials sectors.

And now, an email I received from one of the airlines with whom I have a frequent flier account:

Your WorldPerks # is 666

Dear Friday Jones,

An Open letter to All Airline Customers:

Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now. Visit www.StopOilSpeculationNow.com.

For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers.

Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.

Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.

Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.

The nation needs to pull together to reform the oil markets and solve this growing problem. We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.

Robert Fornaro
Chairman, President and CEO
AirTran Airways

   Bill Ayer
Chairman, President and CEO
Alaska Airlines, Inc.

   Gerard J. Arpey
Chairman, President and CEO
American Airlines, Inc.

Lawrence W. Kellner
Chairman and CEO
Continental Airlines, Inc.

   Richard Anderson
CEO
Delta Air Lines, Inc.

   Mark B. Dunkerley
President and CEO
Hawaiian Airlines, Inc.

Dave Barger
CEO
JetBlue Airways Corporation

   Timothy E. Hoeksema
Chairman, President and CEO
Midwest Airlines

   Douglas M. Steenland
President and CEO
Northwest Airlines, Inc.

Gary Kelly
Chairman and CEO
Southwest Airlines Co.

   Glenn F. Tilton
Chairman, President and CEO
United Airlines, Inc.

   Douglas Parker
Chairman and CEO
US Airways Group, Inc.

[MengerFan]

This is so wicked annoying. Why is it that people have to create phantom enemies out of people engaging in voluntary market trade. Let's blame the SUV drivers for our problems. No, wait. Let's blame "speculators".

[MengerFan]

Perhaps they should read this:

http://www.instituteforenergyresearch.org/2008/06/23/speculators-not-to-blame-for-high-oil-prices/

[error]

An Open Letter to All Airlines:

Your CEOs are complete idiots for trying to blame high oil prices on speculators.

This is just one more reason why I will not give your airlines any business.

[John Edward Mercier]

Wait till all OPEC countries refuse to price oil in USD... the devaluation of the dollar will take on a whole new dimension.

[Jim Johnson]

The airlines purchase a huge amount of fuel, why don't they just buy from the source?  They shouldn't buy from speculators.  Or does the Government prevent them from buying at the source?


And the US military waisting fuel all over the world, that wouldn't be driving up prices.   

[dalebert]

Wait till all OPEC countries refuse to price oil in USD... the devaluation of the dollar will take on a whole new dimension.

Yep, I think people have no idea how that plays into the oil prices and other economic issues. It will be a lot harder to disguise the real problems when they do that.

[John Edward Mercier]

The airlines purchase a huge amount of fuel, why don't they just buy from the source?  They shouldn't buy from speculators.  Or does the Government prevent them from buying at the source?


And the US military waisting fuel all over the world, that wouldn't be driving up prices.   

The airlne buys future contracts on the open market...

The futures market is a 'price discovery' mechanism roughly equal to an ongoing auction.

[K. Darien Freeheart]

I'm actually working on a new market-based outreach project (more details later!) and one of the "behind the scenes" steps involves contacting businesses. I was going to send a letter to the airlines explaining why the TSA (and they're bending over to the Feds) is responsible for not getting my business, but I'm certainly going to be adding this too. Thanks!

[Porcupine_in_MA]

Perhaps they should read this:

http://www.instituteforenergyresearch.org/2008/06/23/speculators-not-to-blame-for-high-oil-prices/

And this - http://abcnews.go.com/2020/Stossel/story?id=5254801&page=1

[John Edward Mercier]

His last point is the realism.
Imagine as a seller if your auctioning off property, do you want more bidders? Or fewer?
Now if you a bidder (airline), do want more bidders? Or fewer?

Of course, many believe the threat of further drilling will lower the price... but supply/demand won't be affected any time soon. The truth is that China has gone to even/odd days and reduced industry to meet the clean air needs for the Summer Olympics.