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Air Fare Through The Roof?


losworld

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i have to fly air india or jetairways now from uk, greedy government taxes etc have pushed all fares up, i fear in the near future i wont be able to fly out 2-3 times per year as ive allways done.

Flights from UK again have stayed static for almost 10 years alhough the carriers are different, flights under 400 quid aint bad really....direct have increased due to taxes and fuel increases.

Please let me know where you can get indirect flights to Bangkok from the UK for less than £400 ?

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How can anyone take this thread seriously. C'mon now kids, take out your crayons and papers and let's do elementary school math.

The airfare went up 20%. I just had a look at airfares on the BKK-LAX route. It's coming in on Kayak at $1066. A 20% increase means that the fare was $890.

OMFG its ginormous fare increase of approx. $176 US :o

And for that small insignificant sum one is treated to a silly thread blaming blame Clinton, Obama, and other US politicians for an increase in airfares around the world.

I don't know if the OP has access to a world map, but if he looks, he wll see that Taiwan is an independent nation. The USA does not set Taiwan's fuel costs.. Fuel costs for Taiwan carriers (EVA's airfares are up to) are attributable to the following;

-98% of Taiwan's energy supply is imported of which almost 100% of its oil related products are imported. Middle east politics and economic recovery around he world have influenced pricing.

- Close to 90% of Taiwan's oil still comes from the Middle East

-There are only two refiners in Taiwan; the government-owned CPC Corp and "publicly" owned Formosa Petrochemical Co. As such, there is not much competiton for refined products such as jet fuel.

- For flights between BKK and TPE, air service costs have jumped more than 20% in the past two years. The fuel price at BKK is set by Thailand. The costs for catering, baggage handling and support services have all jumped. This is a Thai related issue. My costs to fly from BKK to NRT or TPE or HKG have all increased 10-30% depending upon routing and time. Why would US politicians be rsponsible for this?

What I find quite ignorant, and I do not use the term lightly, is the complaint that an airline "try to hide it they now include "all taxes, surcharges, etc." in the numbers"

The airline's approach is what the general public, and consumer advocates have been demanding from airlines around the world for years. An all inclusive price allows proper comparison pricing. Many airlines are accused of misleading consumers by offering a low fare and then adding on all sorts of surcharges at a later stage of the pricing exercise. The airline is to be commended for offering transparent pricing.

I just don't understand the need to blame people or airlines for fare increases due to market changes

I responded previously to another weak argument but for some reason it was said to be "off topic". If you do some research you will discover that under Clinton the rules for trading oil on the overseas markets were changed allowing for "non delivery". Prior anyone purchasing oil had to take physical delivery of the product. Now they do not. This makes it very easy to manipulate the price of oil. Of course the decline of the US dollar has something to do with the increase in the price of oil but not to the current degree - even taking into account the decline in the dollar oil should be around 70 per barrel. This information is available but will require some work to find as the media is swayed to go with the story of "increased demand" even though demand is barely up given the world economy and actual physical inventories in the US are quite high. Yes the price of oil is linked to the international market but it is also vulnerable to the international market and subsequent manipulation and trading.

As per China Airlines I spoke with one of their reps the other day and they confirmed increases due to fuel costs.

Edited by losworld
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How can anyone take this thread seriously. C'mon now kids, take out your crayons and papers and let's do elementary school math.

The airfare went up 20%. I just had a look at airfares on the BKK-LAX route. It's coming in on Kayak at $1066. A 20% increase means that the fare was $890.

OMFG its ginormous fare increase of approx. $176 US :o

And for that small insignificant sum one is treated to a silly thread blaming blame Clinton, Obama, and other US politicians for an increase in airfares around the world.

I don't know if the OP has access to a world map, but if he looks, he wll see that Taiwan is an independent nation. The USA does not set Taiwan's fuel costs.. Fuel costs for Taiwan carriers (EVA's airfares are up to) are attributable to the following;

-98% of Taiwan's energy supply is imported of which almost 100% of its oil related products are imported. Middle east politics and economic recovery around he world have influenced pricing.

- Close to 90% of Taiwan's oil still comes from the Middle East

-There are only two refiners in Taiwan; the government-owned CPC Corp and "publicly" owned Formosa Petrochemical Co. As such, there is not much competiton for refined products such as jet fuel.

- For flights between BKK and TPE, air service costs have jumped more than 20% in the past two years. The fuel price at BKK is set by Thailand. The costs for catering, baggage handling and support services have all jumped. This is a Thai related issue. My costs to fly from BKK to NRT or TPE or HKG have all increased 10-30% depending upon routing and time. Why would US politicians be rsponsible for this?

What I find quite ignorant, and I do not use the term lightly, is the complaint that an airline "try to hide it they now include "all taxes, surcharges, etc." in the numbers"

The airline's approach is what the general public, and consumer advocates have been demanding from airlines around the world for years. An all inclusive price allows proper comparison pricing. Many airlines are accused of misleading consumers by offering a low fare and then adding on all sorts of surcharges at a later stage of the pricing exercise. The airline is to be commended for offering transparent pricing.

I just don't understand the need to blame people or airlines for fare increases due to market changes

I responded previously to another weak argument but for some reason it was said to be "off topic". If you do some research you will discover that under Clinton the rules for trading oil on the overseas markets were changed allowing for "non delivery". Prior anyone purchasing oil had to take physical delivery of the product. Now they do not. This makes it very easy to manipulate the price of oil. Of course the decline of the US dollar has something to do with the increase in the price of oil but not to the current degree - even taking into account the decline in the dollar oil should be around 70 per barrel. This information is available but will require some work to find as the media is swayed to go with the story of "increased demand" even though demand is barely up given the world economy and actual physical inventories in the US are quite high. Yes the price of oil is linked to the international market but it is also vulnerable to the international market and subsequent manipulation and trading.

As per China Airlines I spoke with one of their reps the other day and they confirmed increases due to fuel costs.

Edited by losworld
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Airfares are acting very weird

Friday checked a flight on Asiana from Phuket to SFO one way on Kayak

$808 this had been the price for over a month except it went from 788-808

Checked Sunday and the price was $987 so contacted my travel agent in Bangkok to get the flight ( i hoped at the lower price) got confirmation today for 24,300 (extra 700 baht charge because we are stopping for one night in Seoul)

so really 23,600 baht $783.

now today on Kayak the same flight is $1,243!!!

go figure

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It would be helpful if posters mentioned how much they actually paid for their tickets rather then saying something like it was expensive. I just booked a r/t flight for my son from Baltimore to Bangkok on 28 May for $1785. That was on the Delta website. Could have gotten a United flight on Kayak for $1540 but had a 10 hour layover in SF. Let's face it if you want a convient flight with good connections it will cost more. Also booked a flight r/t Bangkok to Baltimore for mid-May return in August through TV Travel on China AL for B 47,150.

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I have been tracking airfares for my flight to SFO from Phuket in June via Kayak.

Asiana airlines yesterday was $808 one way, today it is $987

what the <profanity removed>!!!

I have been tracking airfares for my flight to SFO from Phuket in June via Kayak.

Asiana airlines yesterday was $808 one way, today it is $987

what the <profanity removed>!!!

I leave on April 27th. Just found a fare $50 cheaper than I paid...same airline, same route, same times...ugh....

Pricing is based upon the inventory of seats on hand. If the seats haven't sold, the airline will discount to put bums in the seats. If the seats have sold, the fares increase. It's always been that way. Air Asia is the master of that pricing strategy in Asia.

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Asiana is definitely worth a few extra dollars, but they don't have a lot of flights from the US so the ones they do fill up fast and this is what leads to the rapid jump in prices as the cheap seats fill faster. An airline like United, who have many more flights, have their cheap seats fill up slower due to more availability.

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Asiana is definitely worth a few extra dollars, but they don't have a lot of flights from the US so the ones they do fill up fast and this is what leads to the rapid jump in prices as the cheap seats fill faster. An airline like United, who have many more flights, have their cheap seats fill up slower due to more availability.

I just dont buy that.

Like i said i booked the ticket thru my travel agent in Bangkok and got the fare for 24,300 and she aplogozed for the additioanl 100 baht increase for feul costs.

I just have a feeling kayak is messed up

Asiana has plenty of flights to the states. one/day to sf

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never bet on one horse laugh.gif

i always check serveral sites for the best prices, even kayak can make mistakes!

Yes they do screw up, or they don't have the best prices. However, Kayak is a good indicator, followed by Orbitz. Here are a couple tips that have worked well for me over the years;

1. Price by legs .e. LAX- BKK

2. Orbitz often has some of the lowest BKK-destination leg fares/

3. Some airlines offer better fares on their websites. EVA is a good example.

4, Some sites promote their preferred suppliers and don't show all the routes. Expedia and Vayama are examples. Find a routing on Kayak or Orbiz (airline and times) and put in to these sites. Sometimes they are lower.

5. asian travel agencies often have special volume discounts with carriers.The Chinese carriers are examples.

6. If you have to make multiple stops, consider a Round The world Fare. Best kept secret. I use this when I have to stop in multiple EU destinations and then end up in North America. SQ has one of the most attractive fares. The only catch is that you need to buy a separate ticket between JFK/EWR and a SQ gateway on the pacific coast. However, such a US fare can be had for peanuts.

7. Consider alternative routings. SEA is sometimes cheaper than other hubs because other cities have added Asian destinations and the airlines need to fill capacity out of SEA.

I should be a travel agent. laugh.gif

Edited by geriatrickid
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I responded previously to another weak argument but for some reason it was said to be "off topic". If you do some research you will discover that under Clinton the rules for trading oil on the overseas markets were changed allowing for "non delivery". Prior anyone purchasing oil had to take physical delivery of the product. Now they do not. This makes it very easy to manipulate the price of oil. Of course the decline of the US dollar has something to do with the increase in the price of oil but not to the current degree - even taking into account the decline in the dollar oil should be around 70 per barrel. This information is available but will require some work to find as the media is swayed to go with the story of "increased demand" even though demand is barely up given the world economy and actual physical inventories in the US are quite high. Yes the price of oil is linked to the international market but it is also vulnerable to the international market and subsequent manipulation and trading.

And yesterday Saudi Arabia said it is cutting production due to "oversupply"

So you kids can work that one out for yourselves.

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I read an article a few months ago (sorry can't remember any specifics for reference) that stated its best to buy your ticket on Tuesday of Wednesday, not fly that day but to actually make the purchase. Again I don't remember specifics but it had something to do with Tuesday being when when airlines have sales and later in the week the flights get booked leaving only the highest fares.

Just experiment a little if you have time, pick a few destinations, pick travel days and check the fares from various online booking agents using the same data. Do this each day for a couple weeks and keep a record to check the trends.

agreed, but i also thought it was advised to fly on those days.

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How can anyone take this thread seriously. C'mon now kids, take out your crayons and papers and let's do elementary school math.

The airfare went up 20%. I just had a look at airfares on the BKK-LAX route. It's coming in on Kayak at $1066. A 20% increase means that the fare was $890.

OMFG its ginormous fare increase of approx. $176 US :o

And for that small insignificant sum one is treated to a silly thread blaming blame Clinton, Obama, and other US politicians for an increase in airfares around the world.

I don't know if the OP has access to a world map, but if he looks, he wll see that Taiwan is an independent nation. The USA does not set Taiwan's fuel costs.. Fuel costs for Taiwan carriers (EVA's airfares are up to) are attributable to the following;

-98% of Taiwan's energy supply is imported of which almost 100% of its oil related products are imported. Middle east politics and economic recovery around he world have influenced pricing.

- Close to 90% of Taiwan's oil still comes from the Middle East

-There are only two refiners in Taiwan; the government-owned CPC Corp and "publicly" owned Formosa Petrochemical Co. As such, there is not much competiton for refined products such as jet fuel.

- For flights between BKK and TPE, air service costs have jumped more than 20% in the past two years. The fuel price at BKK is set by Thailand. The costs for catering, baggage handling and support services have all jumped. This is a Thai related issue. My costs to fly from BKK to NRT or TPE or HKG have all increased 10-30% depending upon routing and time. Why would US politicians be rsponsible for this?

What I find quite ignorant, and I do not use the term lightly, is the complaint that an airline "try to hide it they now include "all taxes, surcharges, etc." in the numbers"

The airline's approach is what the general public, and consumer advocates have been demanding from airlines around the world for years. An all inclusive price allows proper comparison pricing. Many airlines are accused of misleading consumers by offering a low fare and then adding on all sorts of surcharges at a later stage of the pricing exercise. The airline is to be commended for offering transparent pricing.

I just don't understand the need to blame people or airlines for fare increases due to market changes

http://www.csmonitor.com/USA/Justice/2011/0421/Fraud-in-gas-and-oil-prices-Obama-s-new-task-force-will-investigate Check out this post. I'd advise you to educate yourself a bit more on this issue before you start posting all over hells half acre like you know everything.

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That's right... I remember reading the same study and its findings... said shop and purchase online on Tuesdays...

Also, lately, American Airlines tickets aren't being priced any longer on several of the large online booking services. So you need to check their prices directly thru the AA web site... And they often have competitive fairs thru Japan to L.A.

That said, the best fares lately have been thru China Eastern, but you'd better be prepared for a many hours long layover in a relatively austere PuDong Shanghai airport.

I read an article a few months ago (sorry can't remember any specifics for reference) that stated its best to buy your ticket on Tuesday of Wednesday, not fly that day but to actually make the purchase. Again I don't remember specifics but it had something to do with Tuesday being when when airlines have sales and later in the week the flights get booked leaving only the highest fares.

Just experiment a little if you have time, pick a few destinations, pick travel days and check the fares from various online booking agents using the same data. Do this each day for a couple weeks and keep a record to check the trends.

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3. Some airlines offer better fares on their websites. EVA is a good example.

I agree with that situation re EVA. I used to fly them regularly, and always found much better prices direct from their website than anything listed on any of the travel sites, even places like Kayak.... I've never bought an EVA ticket from anywhere other than EVA's own web site, because they always have the best available fares I could find for EVA flights.

Sadly, these days, EVA is rarely the most price competitive in flights to the West Coast...

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Flights from Thailand to Europe have stayed pretty much static for at least 6 years, a very small increase only....30k baht gets you to London as it was the same in 2004, so no real increase there.

Business class certainly not.

Qatar/Etihad paid 65k five years back, increasing each year by 10k at least, 2011 110K, was lucky though to book a promotion lasting a few days and paid 83K for next week flight B)

BTW, booked EVA business to AMS first at 78K, but since they have "160D sliding flat beds" cancelled and re-booked on Etihad's promotion.

Edited by tartempion
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I checked AA's web site just now for flights BKK to LAX this coming June... Everything from after the first week of June onward was $1532 all in for round trip... In the first week of the month, they had fares about $80 each way lower....

Thru CheapTickets, they were showing some China Eastern flights as low as $1254 all in in the middle of the month, and Asiana close at $1296 all in, both for June 13 out and June 18 return, in the example I modeled.

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Let's move this over to the travel forum.

Bye the way, fares always go up around summer. I booked a flight from BKK to LAX, leaving in 10 days. Price now is pretty much the same as when I booked it back in mid-Jan. Some days up a bunch, some days exactly the same....

I booked from bk,to Manchester on 29th janury,returning to BK on 147th feb and cost me 42,000 baht

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http://www.csmonitor...ill-investigate Check out this post. I'd advise you to educate yourself a bit more on this issue before you start posting all over hells half acre like you know everything.

You rely on an article that announces the appointment of a group to investigate gas pricing in the USA. How is that related to the price of jet fuel in Taiwan or in Thailand?

The announcement is intended to respond to complaints from the US public as they find that they can no longer fill up their gas guzzling SUVs for a fraction other people in other countries pay. Nowhere does it say there is a finding of pricefixing in respect to asian jet fuel prices. I do see that a former US energy trader had to pay a $30 million fine for an alleged manipulative scheme in 2006 to drive down natural gas prices. Yes, that really caused prices to jump.

How about you educate yourself first? Large airlines have sophisticated bulk purchasing programs direct from refiners or designated suppliers. These mega corporations are not going to tolerate other companies trying to screw with them. Jet fuel distribution operates much differently from the way you go and buy petrol.

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http://www.csmonitor...ill-investigate Check out this post. I'd advise you to educate yourself a bit more on this issue before you start posting all over hells half acre like you know everything.

You rely on an article that announces the appointment of a group to investigate gas pricing in the USA. How is that related to the price of jet fuel in Taiwan or in Thailand?

The announcement is intended to respond to complaints from the US public as they find that they can no longer fill up their gas guzzling SUVs for a fraction other people in other countries pay. Nowhere does it say there is a finding of pricefixing in respect to asian jet fuel prices. I do see that a former US energy trader had to pay a $30 million fine for an alleged manipulative scheme in 2006 to drive down natural gas prices. Yes, that really caused prices to jump.

How about you educate yourself first? Large airlines have sophisticated bulk purchasing programs direct from refiners or designated suppliers. These mega corporations are not going to tolerate other companies trying to screw with them. Jet fuel distribution operates much differently from the way you go and buy petrol.

ROFLMAO you must be having a tremendously productive and enjoyable time in Tland posting 43 times per day:) What the article talks about is manipulative trading and this is what has greatly driven up the price of oil which in turn drives up the price of jet fuel but according to you it is a micro economic issue. And the Asian airlines are not going to allow the tremendously powerful trading houses in New York and London to dictate fuel prices???? Have another shot of koolaid and I hope you never aspire to be a broker.

Edited by losworld
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http://www.csmonitor...ill-investigate Check out this post. I'd advise you to educate yourself a bit more on this issue before you start posting all over hells half acre like you know everything.

You rely on an article that announces the appointment of a group to investigate gas pricing in the USA. How is that related to the price of jet fuel in Taiwan or in Thailand?

The announcement is intended to respond to complaints from the US public as they find that they can no longer fill up their gas guzzling SUVs for a fraction other people in other countries pay. Nowhere does it say there is a finding of pricefixing in respect to asian jet fuel prices. I do see that a former US energy trader had to pay a $30 million fine for an alleged manipulative scheme in 2006 to drive down natural gas prices. Yes, that really caused prices to jump.

How about you educate yourself first? Large airlines have sophisticated bulk purchasing programs direct from refiners or designated suppliers. These mega corporations are not going to tolerate other companies trying to screw with them. Jet fuel distribution operates much differently from the way you go and buy petrol.

I suggest you read the following taken from a current article:

Usually you hear this debate in scholarly circles or read it in political tracts where orthodox views collide with more alarmist projections about the oil supply "peaking".

But officials in the Third World don't see the subject as academic. Reserve Bank of India Governor Duvvuri Subbarao charges that: "Speculative movements in commodity derivative markets are also causing volatility in prices".

The World Bank has held meetings on the issue, because it is seen as a matter of "utmost urgency".

"The price of food is a matter of life and death for the very poorest people in the world," said Tom Arnold, CEO of Concern Worldwide, the international humanitarian agency, ahead of his participation at The Open Forum on Food at World Bank headquarters.

"With many families spending up to 80 per cent of their income on basic foods to survive, even the slightest increase in price can have devastating effects and become a crises for the poorest," he said.

Journalist Josh Clark argues on the website "How Stuff Works" that much of the oil speculation is rooted in the financial crisis:

The next time you drive to the gas station, only to find prices are still sky high compared to just a few years ago, take notice of the rows of foreclosed houses you'll pass along the way. They may seem like two parts of a spell of economic bad luck, but high gas prices and home foreclosures are actually very much inter-related. Before most people were even aware there was an economic crisis, investment managers abandoned failing mortgage-backed securities and looked for other lucrative investments. What they settled on was oil futures.

Whistleblowers on oil speculation

The debate within the industry is more subdued, perhaps to avoid a public fight between suppliers and distributors who don't want to rock the boat.

But some officials like Dan Gilligan, president of the Petroleum Marketers Association, representing 8,000 retail and wholesale suppliers has spoken out.

"Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities," he argues. "Not by companies that need oil, not by the airlines, not by the oil companies. But by investors who profit money from their speculative positions."

Now, a prominent and popular market analyst is throwing caution to the wind by blowing the whistle on speculators.

Finance expert Phil Davis runs a website and widely read newsletter to monitor stocks and options trades. He's a professional's professional, whose grandfather taught him to buy stocks when he was just ten years old.

His website is Phil's Stock World, and stocks are his world. He's subtitled the site: "High Finance for Real People."

He is usually a sober and calm analyst, not known as maverick or dissenter.

When I met Phil the other night, he was on fire, enraged by what he believes is the scam of the century that no one wants to talk about, because so many powerful people armed with legions of lawyers want unquestioning allegiance, and will sue you into silence.

He studies the oil/food issue carefully and has concluded:

It's a scam folks, it's nothing but a huge scam and it's destroying the US economy as well as the entire global economy but no one complains because they are 'only' stealing about $1.50 per gallon from each individual person in the industrialised world. It's the top 0.01 per cent robbing the next 39.99 per cent – the bottom 60 per cent can't afford cars anyway (they just starve quietly to death, as food prices climb on fuel costs). If someone breaks into your car and steals a $500 stereo, you go to the police, but if someone charges you an extra $30 every time you fill up your tank 50 times a year ($1,500) you shut up and pay your bill. Great system, right?

Phil is just getting started, as he delves into the intricacies of the NYMEX market that handles these trades:

The great thing about the NYMEX is that the traders don't have to take delivery on their contracts, they can simply pay to roll them over to the next settlement price, even if no one is actually buying the barrels. That's how we have developed a massive glut of 677 million barrels worth of contracts in the front four months on the NYMEX and, come rollover day – that will be the amount of barrels "on order" for the front 3 months, unless a lot barrels get dumped at market prices fast. Keep in mind that the entire United States uses 'just' 18M barrels of oil a day, so 677M barrels is a 37-day supply of oil. But, we also make 9M barrels of our own oil and import 'just' 9M barrels per day, and 5M barrels of that is from Canada and Mexico who, last I heard, aren't even having revolutions. So, ignoring North Sea oil Brazil and Venezuela and lumping Africa in with OPEC, we are importing 3Mbd from unreliable sources and there is a 225-day supply under contract for delivery at the current price or cheaper plus we have a Strategic Petroleum Reserve that holds another 727 Million barrels (full) plus 370M barrels of commercial storage in the US (also full) which is another 365.6 days of marginal oil already here in storage in addition to the 225 days under contract for delivery.

These contracts for oil outnumber their actual delivery, a sign of speculation and market manipulation, as oil companies win government authorisations for wells but then don't open them for exploration or exploitation.

It's all a game of manipulating oil supply to keep prices up. And no one seems to be regulating it.

Danger met with silence

What Phil sees is a giant but intricate game of market manipulation and rigging by a cartel – not just an industry – that actually has loaded tankers criss-crossing the oceans but only landing when the price is right.

There is nothing that the conga-line of tankers between here and OPEC would like to do more than unload an extra 277 million barrels of crude at $112.79 per barrel (Friday's close on open contracts and price) but, unfortunately, as I mentioned last week, Cushing, Oklahoma (Where oil is stored) is already packed to the gills with oil and can only handle 45M barrels if it started out empty so it is, very simply, physically impossible for those barrels to be delivered. This did not, however, stop 287M barrels worth of May contracts from trading on Friday and GAINING $2.49 on the day.

He asks: "Who is buying 287,494 contracts (1,000 barrels per contract) for May delivery that can't possibly be delivered for $2.49 more than they were priced the day before? These are the kind of questions that you would think regulators would be asking – if we had any."

The TV news magazine 60 minutes spoke with Dan Gilligan who noted that investors don't actually take delivery of the oil. "All they do is buy the paper, and hope that they can sell it for more than they paid for it. Before they have to take delivery."

He says they make their fortunes "on the volatility that exists in the market. They make it going up and down."

Payam Sharifi, at the University of Missouri-Kansas City, notes that even as the rise in oil prices threatens the world economy, there is almost total silence on the danger:

This issue ought to be discussed again with a renewed interest – but the media and much of the populace at large have simply accepted high food and oil prices as an unavoidable fact of life, without any discussion of the causes of these price rises aside from platitudes.

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http://www.csmonitor...ill-investigate Check out this post. I'd advise you to educate yourself a bit more on this issue before you start posting all over hells half acre like you know everything.

You rely on an article that announces the appointment of a group to investigate gas pricing in the USA. How is that related to the price of jet fuel in Taiwan or in Thailand?

The announcement is intended to respond to complaints from the US public as they find that they can no longer fill up their gas guzzling SUVs for a fraction other people in other countries pay. Nowhere does it say there is a finding of pricefixing in respect to asian jet fuel prices. I do see that a former US energy trader had to pay a $30 million fine for an alleged manipulative scheme in 2006 to drive down natural gas prices. Yes, that really caused prices to jump.

How about you educate yourself first? Large airlines have sophisticated bulk purchasing programs direct from refiners or designated suppliers. These mega corporations are not going to tolerate other companies trying to screw with them. Jet fuel distribution operates much differently from the way you go and buy petrol.

I suggest you read the following taken from a current article:

Usually you hear this debate in scholarly circles or read it in political tracts where orthodox views collide with more alarmist projections about the oil supply "peaking".

But officials in the Third World don't see the subject as academic. Reserve Bank of India Governor Duvvuri Subbarao charges that: "Speculative movements in commodity derivative markets are also causing volatility in prices".

The World Bank has held meetings on the issue, because it is seen as a matter of "utmost urgency".

"The price of food is a matter of life and death for the very poorest people in the world," said Tom Arnold, CEO of Concern Worldwide, the international humanitarian agency, ahead of his participation at The Open Forum on Food at World Bank headquarters.

"With many families spending up to 80 per cent of their income on basic foods to survive, even the slightest increase in price can have devastating effects and become a crises for the poorest," he said.

Journalist Josh Clark argues on the website "How Stuff Works" that much of the oil speculation is rooted in the financial crisis:

The next time you drive to the gas station, only to find prices are still sky high compared to just a few years ago, take notice of the rows of foreclosed houses you'll pass along the way. They may seem like two parts of a spell of economic bad luck, but high gas prices and home foreclosures are actually very much inter-related. Before most people were even aware there was an economic crisis, investment managers abandoned failing mortgage-backed securities and looked for other lucrative investments. What they settled on was oil futures.

Whistleblowers on oil speculation

The debate within the industry is more subdued, perhaps to avoid a public fight between suppliers and distributors who don't want to rock the boat.

But some officials like Dan Gilligan, president of the Petroleum Marketers Association, representing 8,000 retail and wholesale suppliers has spoken out.

"Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities," he argues. "Not by companies that need oil, not by the airlines, not by the oil companies. But by investors who profit money from their speculative positions."

Now, a prominent and popular market analyst is throwing caution to the wind by blowing the whistle on speculators.

Finance expert Phil Davis runs a website and widely read newsletter to monitor stocks and options trades. He's a professional's professional, whose grandfather taught him to buy stocks when he was just ten years old.

His website is Phil's Stock World, and stocks are his world. He's subtitled the site: "High Finance for Real People."

He is usually a sober and calm analyst, not known as maverick or dissenter.

When I met Phil the other night, he was on fire, enraged by what he believes is the scam of the century that no one wants to talk about, because so many powerful people armed with legions of lawyers want unquestioning allegiance, and will sue you into silence.

He studies the oil/food issue carefully and has concluded:

It's a scam folks, it's nothing but a huge scam and it's destroying the US economy as well as the entire global economy but no one complains because they are 'only' stealing about $1.50 per gallon from each individual person in the industrialised world. It's the top 0.01 per cent robbing the next 39.99 per cent – the bottom 60 per cent can't afford cars anyway (they just starve quietly to death, as food prices climb on fuel costs). If someone breaks into your car and steals a $500 stereo, you go to the police, but if someone charges you an extra $30 every time you fill up your tank 50 times a year ($1,500) you shut up and pay your bill. Great system, right?

Phil is just getting started, as he delves into the intricacies of the NYMEX market that handles these trades:

The great thing about the NYMEX is that the traders don't have to take delivery on their contracts, they can simply pay to roll them over to the next settlement price, even if no one is actually buying the barrels. That's how we have developed a massive glut of 677 million barrels worth of contracts in the front four months on the NYMEX and, come rollover day – that will be the amount of barrels "on order" for the front 3 months, unless a lot barrels get dumped at market prices fast. Keep in mind that the entire United States uses 'just' 18M barrels of oil a day, so 677M barrels is a 37-day supply of oil. But, we also make 9M barrels of our own oil and import 'just' 9M barrels per day, and 5M barrels of that is from Canada and Mexico who, last I heard, aren't even having revolutions. So, ignoring North Sea oil Brazil and Venezuela and lumping Africa in with OPEC, we are importing 3Mbd from unreliable sources and there is a 225-day supply under contract for delivery at the current price or cheaper plus we have a Strategic Petroleum Reserve that holds another 727 Million barrels (full) plus 370M barrels of commercial storage in the US (also full) which is another 365.6 days of marginal oil already here in storage in addition to the 225 days under contract for delivery.

These contracts for oil outnumber their actual delivery, a sign of speculation and market manipulation, as oil companies win government authorisations for wells but then don't open them for exploration or exploitation.

It's all a game of manipulating oil supply to keep prices up. And no one seems to be regulating it.

Danger met with silence

What Phil sees is a giant but intricate game of market manipulation and rigging by a cartel – not just an industry – that actually has loaded tankers criss-crossing the oceans but only landing when the price is right.

There is nothing that the conga-line of tankers between here and OPEC would like to do more than unload an extra 277 million barrels of crude at $112.79 per barrel (Friday's close on open contracts and price) but, unfortunately, as I mentioned last week, Cushing, Oklahoma (Where oil is stored) is already packed to the gills with oil and can only handle 45M barrels if it started out empty so it is, very simply, physically impossible for those barrels to be delivered. This did not, however, stop 287M barrels worth of May contracts from trading on Friday and GAINING $2.49 on the day.

He asks: "Who is buying 287,494 contracts (1,000 barrels per contract) for May delivery that can't possibly be delivered for $2.49 more than they were priced the day before? These are the kind of questions that you would think regulators would be asking – if we had any."

The TV news magazine 60 minutes spoke with Dan Gilligan who noted that investors don't actually take delivery of the oil. "All they do is buy the paper, and hope that they can sell it for more than they paid for it. Before they have to take delivery."

He says they make their fortunes "on the volatility that exists in the market. They make it going up and down."

Payam Sharifi, at the University of Missouri-Kansas City, notes that even as the rise in oil prices threatens the world economy, there is almost total silence on the danger:

This issue ought to be discussed again with a renewed interest – but the media and much of the populace at large have simply accepted high food and oil prices as an unavoidable fact of life, without any discussion of the causes of these price rises aside from platitudes.

koudos :clap2: on an excellent comprehensive analysis of the current petroleum fuel and byproduct situation.

Petroleum finds it;s way in all aspects of our lives, Either as a component in Petrochemicals and products, or as a means of production and logistics.Every product , from food to lipstick has a petroleum component.

When the petroleum futures market was deregulated,in the US. under prez Bush and speculators no longer had to take physical possession of oil purchased, the gloves came off,and what we see now, is a negative economic affect that has managed to affect the whole world. Unfortunately the Financiers hold the US government captive,by financing it's political campaigns, and Deficit spending. It was reported that Prez Obama will need to raise a Billion Dollars to start his re-election campaign.

This new economic paradigm has enabled the financiers to put their hands in the pockets 0f everyone in the world.

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Loso-Great post. I remember when the rules changed on oil contracts during the Clinton adminstration. Prior to that you actually had to take possesion of the oil thereby limiting massive speculation. Now wall street runs main street even after the 2008 disaster. The same clowns that reaped big profits amid economic turmoil are now firmly entrenched in the Obama administration. Sad

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Loso-Great post. I remember when the rules changed on oil contracts during the Clinton adminstration. Prior to that you actually had to take possesion of the oil thereby limiting massive speculation. Now wall street runs main street even after the 2008 disaster. The same clowns that reaped big profits amid economic turmoil are now firmly entrenched in the Obama administration. Sad

Glad you enjoyed it. Now I only wish the mainstream media would carry these stories so the public could learn what really goes on. Actually, Al Jazeera is an excellent news source and is comprised mainly of BBC employees who have lost their shackles and chains:)

Edited by losworld
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Loso-Great post. I remember when the rules changed on oil contracts during the Clinton adminstration. Prior to that you actually had to take possesion of the oil thereby limiting massive speculation. Now wall street runs main street even after the 2008 disaster. The same clowns that reaped big profits amid economic turmoil are now firmly entrenched in the Obama administration. Sad

Glad you enjoyed it. Now I only wish the mainstream media would carry these stories so the public could learn what really goes on. Actually, Al Jazeera is an excellent news source and is comprised mainly of BBC employees who have lost their shackles and chains:)

What people fail to realize is that if there wasn't a serious oil crisis, if any producer could actually pump more oil to respond to the price signals that are being sent, then the speculators would be entirely ineffective at raising the price. Thus, there would be no speculation. The speculators chose oil precisely because peak oil is real, and there is no substitute for it. You can blame speculators for all the world's ills, and I would not have any issue with a rule that required anyone purchasing a futures contract to prove they have the infrastructure to take physical delivery of the product, but that will not make a serious dent in the mercilessly increasing price of oil.

It will remove the wild oscillations we have seen, but it will not drastically affect the average price you are going to pay. And sadly, that average price is going no where but up for the remainder of your life. And a law to limit speculation will mean that airlines can't hedge the price either, so everyone will be at the mercy of the oil refineries with no recourse. Next step would be to nationalize all oil refineries. Again, fine by me, but understand the consequences of that.

People will slow their use of oil as more and more fall into unspeakable poverty, but those that remain will be even more resolute and capable of bidding the price higher and higher. This is truly a physical crisis. The speculators are just an annoying noise on top of the real signal.

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Greg B. How is there a serious oil crisis? Libya produces less than 2% of the world's oil supply. the saudis increased production dramatically. Demand is down in some markets due to price. While you are entitled to your opinion i tend to put mech more value in Losworld. Not all biz hedge oil contracts as it is a coin toss so far as predicting the top/bottom. imho

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Ok, so now we have gone from a complaint about a relatively small increase in airline fares to a discourse on international fuel prices. The fact of the matter is that jet fuel is but one component in the calculation of air fares. Instead of fixating on one component, how about taking into consideration the costs that impact air carriers, or does that disturb the need to embrace conspiracy theories?

Here are some of the costs that have increased for carriers in the past three years;

- Lease and finance costs: Although interest rates had decreased in previous years, interest rates are now moving upwards. Even a nominal 1% increase in the cost of financing a large debt has an impact.

- Labour costs: Although employee wages were static for several years, wages are now increasing.

- Cost of equipment and supplies: Excluding fuel, these costs have increased significantly. Even the cost of the bag of pretzels has gone up for airlines.

- Landing & Airport service fees: Look at the costs of some North American airports. They have increased as governments download the debt.

- Overflight fees: While some folks were snoozing in their comfy airline seats, China and Russia boosted some overflight fees.

- Taxes: Additional taxes have been added to airline tickets as governments download the debt.

- Shareholder demands for returns: The airlines posted some massive losses over the past few years. Shareholders have demanded a return on their investment.

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