They're not wrong, you know. I love to bash the airlines as much as the next guy. But they're right. People are mad about $15 surcharges, late flights, and such, but fuel prices ARE sky high.

I knew that speculators were part of the problem but I had no idea (if the figures give are correct) it was that big of a problem.

Airlines have some of the largest lobbyist groups in the country. They line the pockets of politicians to allow the crappiest customer service on the planet, and to use any excuse to screw their customers. In turn, laws are passed to allow them to lie and say "Weather Delays", etc, etc.

While I agree SOMETHING has to be done with Oil Prices, I think politicians will listen to those who financially support them, but not their constituents. Since the Oil lobbyist have more money, I think the airlines (and their customers) are screwed on this one.

Pay Up America!

The airlines need my help? I'll refer them to my customer service line - they've been trained to handle these sorts of annoying complaints. Maybe some gas vouchers or a free fill-up at a future date (subject to terms and blackout dates) would help and get them out of my hair...

this is the first good thing to come from the ailines in a long time. Oil should be very clear cut...if you buy it, you have to store it. Why on gods good earth would we allow oil to be "Dropped shipped"

Yes, let's stop speculation. Don't worry about decades of negligent auto inefficiencies, wasteful Hummer monstrosities and uncontrolled world-wide temperature rises due to the combustion of fossil fuels.

If we stop the speculators, it will all go away. I sure love quick fixes...maybe this will go as well as ethanol did.

I don't understand... maybe this makes sense to people who know more about the stock market? If the problem is that prices go up because the same barrel of oil is bought and sold lots of times, it sounds like there are too many middlemen. Instead of buying their barrels from the 20th middleman down the line, why don't the airlines cut out the speculators and buy their barrels of oil directly from whoever's selling them in the first place? (Whoever sells the oil to the first speculator.)

Treat me respectfully, don't keep me hostage on the plane, etc., and then raise your fares. I can deal with higher prices, but I can't deal with being treated like I'm your property once I buy a ticket or board a plane.

There's story info missing here, like where were the airlines' lobbyists when the "regulatory limits" were being "weakened or removed." I'm not saying they're wrong about oil futures trading. But they're not helpless, either, as we know.

I've been blaming the speculators all along. I'm glad Americans are wising up on this issue. I wish us all great success in fixing this issue. Hang the speculators, and raise the dollar value, and we'll be back in shape.

@arcman001: Ethanol didn't work because it was expensive, inefficient fuel, and also our food. Don't buy the false science that is global warming, and alternative fuel sources such as Ethanol. As an American you have a right to have a hummer, and a right to pay dearly for it at the pump. A quick fix is better then the alternative, which is currently, no fix.

How about we get a federal airline passenger bill of rights that outlaws bag checking fees and fuel surcharges instead?

@vladthepaler: The speculators make the market. If you produced oil, why would you sell to the airlines for a lesser price than you'd get on the open market? Not to mention that airlines don't own oil refineries to make jet fuel out of crude oil.

Hmm, I never thought the airline industry would be calling for an increase in government oversight and regulation, maybe we can get more government oversight and regulation concerning the airline industry while we're at it.

Oil is expensive because demand is higher. That is what a free market does. I am surprised all those free marketeers now suddenly don't like the free market anymore.

BTW, oil is extra expensive in the US due to the very soft US$, which is due to the lacks US policy on keeping the $ hard.

The current policy of the US is not to care about the exchange rate of the dollar, because 'the American economy is strong'. Only recently, the president has said that he has a 'strong dollar policy'. However, nobody is really sure what that policy is, other than a statement by the president. Regardless, I haven't heard any democrats complain, so I have to assume they agree.

Just to throw in another quote on the US exchange rate policy. A couple of years ago, when EU members showed their concern about a possible weakening of the dollar value due to the double US deficit, the answer from the administration was, that if the (massively negative) American trade-balance was a concern to the Europeans, perhaps they could make it smaller by purchasing some fine American products. I.e.: "We are not going to stop importing so much, but we'll be happy to export more".

Regarding the oil price, in other currencies it hasn't increase nearly as much as in dollars (about 15% over the last year in euroland). Oil producing countries simply see the sliding dollar, and make sure that they are getting the same value for their oil.

Oh, and in Europe, the EU is nicely increasing taxes on diesel (yeah, and actual tax increase in stead of a tax holiday). Nobody really knows why, but French president Sarkozy was laughed at for suggesting to max that new tax on diesel (i.e. make sure that the tax which is levied as a percentage of the price, can not go over a certain fixed value in cents). The Dutch PM responded with "We should not lower oil prices, we should use less oil".

@vladthepaler: Oil is a commodity that is traded at one value. So even if Bob Jones makes a barrel in his back yard, the price for that oil is still $140. His contribution of that oil will increase supply, and drive the price of oil collectively down, .00001 cent. But thats how it works.

This is the best explanation of why oil is so expensive I've read so far. Quick and to the point. The entire country needs to read this letter, right now.

People like to blame speculation for the recent run-up in oil prices, but it's not that simple ...

[www.npr.org]

It does say something that even Southwest signed the letter. After hedging their bets at $51 a barrel, they've watched their competition get hammered again and again. They would stand to benefit from the bankruptcy of even more airlines.

I'm taking their request very seriously.

As much as I dislike the airline business and their lack of customer service, this is a totally different issue, and I agree with them. Speculation needs to end and gas prices will see a sharp decline in no time.

We won't go back to $1.25 gas any more since the demand is higher, but we won't see $4 gas either. Think something in the middle.

I agree with most of the people here... this is a Good Thing that came from the airlines!

People keep freaking out at the idea of "peak oil" which has been thrown around for the last 2 decades, saying it'll happen in 2 years or in 50 years... but it's been gaining more popularity because of the "go green" movement, politicians, etc. This is causing market speculation.

What this means, is you're paying more at the pump mostly because people are freaking out, not because the costs of production, etc are increasing.

When you hear on the news that oil companies are making "record profits," blame market speculation instead of the oil companies themselves. We all know they can be evil, but they're not always to blame for everything.

i say we ground all, every single one, no exceptions for a month. then see what happens to oil prices.

@Nepkarel: excellent point! I too was wondering where all the free marketeers went.

Also, since oil is a commodity traded on the open market, the only real way to make it go down (independent of currency issues) is to reduce demand. Airlines are dying because they just don't make economic sense. Too bad we don't have any reasonable train infrastructure as an alternative :(

There are a lot of issues at hand: speculation, growing demand, subsidies in developing nations, reduced refining capacity, etc.; you name it. This is the best-crafted open indictment on the topic I've seen, and it's spot-on. So-called institutional commodity trading is absolutely absurd. No company/trust/fund should be allowed to purchase and trade oil with other companies if it has no capability of using, taking delivery of, or refining the oil.

I see there's a lot of "they screwed us, so screw them" in the comments already, but they're not lying. This is something actually in the public interest, broader than simply air travel.

@vladthepaler: Seriously. These CEOs are so removed from reality that they've never experienced buying a mattress factory direct to cut out the middleman. Watch more daytime TV you rich jerks.

@Nepkarel: I'm a free markateer, and I'm right here. Demand is up, but so is supply. But right now, economics 101 is not the reason oil is so high. I'm against regulation almost always, but, I've had it out for these speculators for some time now. I'll turn my back for a minute, you guys regulate the crap out of them.

@vladthepaler: The main issue with commodities speculation (be it oil, corn, etc) is that the trading, pricing, etc. is based on future expectations on how that particular resource will be used and how much will be available. That's why political geological issues near oil sources cause the price to go up, even though they haven't actually affected production yet.

The airlines have a point, however. Given the rise in commodities trading by 'average' investors, through ETFs and mutual funds, there has been more money poured into the system causing an increase in trading, and thus prices. Similar to what happened with the housing market, the 'average' investor thinking he / she could flip houses with no effort. Putting restraints on the trading (i.e. making people actually hold the futures contract for it's scheduled length) would help lower the inflated prices.

@privateer: Those $51 oil contracts don't last forever. They'll be buying at market rates soon enough.

@arcman001: If we stop the speculators, it will all go away. I sure love quick fixes...maybe this will go as well as ethanol did.

I don't think this is true. I think if prices go back down people will still look for fuel efficient cars and what-not. The rise in the price of oil shocked them into dealing with the realities of a wasteful society.

didn't we already bail them out in 2001/2002? maybe if they spent less time asking customers for help and more time helping customers they wouldn't be having such a hard time. on the other hand, maybe they can create some sort of points system...for every 50 signatures each person collects they can take $.50 off of the checked bag charge...

@Norcross: "Similar to what happened with the housing market, the 'average' investor thinking he / she could flip houses with no effort. Putting restraints on the trading (i.e. making people actually hold the futures contract for it's scheduled length) would help lower the inflated prices."

Very accurate comparison. This is mostly what is to blame, at least in institutional trading.

"The Speculators" are just the latest boogeyman. The airlines are speculators too! The airlines are buying futures contracts because they expect the price to keep going up too. They're contributing to "the problem" as well. The difference, according to the airlines, is that they actually "receive delivery" for the oil. What difference does that make? You want to close out other people just because they're not "using" the oil? Let's say we did that. We regulate the market so only people like the airlines can bid on oil. What do you think they're going to do? Do you think they'll buy just as much oil as they are now? No way! They're going to keep speculating and hoard all the oil. That will make the price go right back up, but it'll sure help the airlines bottom line, thanks to government regulation.

I'm not anti-corporation, but regulating out the "paper traders" is equivalent to corporate welfare in my opinion.

A good article that explains commodity speculation:
[www.creators.com]

"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. "

Hmmm, if de-regulation caused unchecked market speculation and manipulation in oil, is it possible that it did the same in the airline industry? How much of the current cost of doing business for an airline comes from the interest on debt payments due to takeovers and mergers?

@hwyengr: Very true. They speculated themselves when they bought in at that price. But Southwest is in a more protected, unique position in the airline industry. I can see how they might easily have just sat this one out and watched to see how things shook loose.

Dear Combined Airlines:

I am in receipt of your open letter and am writing to inform you that I, as a consumer of your services, am taking this situation 'very seriously.'
.

Please stop the speculators because we don't have enough credit to be speculators ourselves?

In other words, no one will sell us futures because we can't cover the spread if we lose.

waaaaa

Someone please explain to me why the Enron loophole was established. Besides increasing profit for each investor, what benefit does having de-regulated commodity investing have on the economy?

From what I have read, this loophole has made fortunes and has had NO benefit for the industry as a whole. If that is the case, there should be nothing stopping congress from closing the loopholes and RE-regulating the industry.

Oil prices, Food Prices, all prices are high because the dollar in your pocket is worth less.

Every time the Federal Reserve decides to print another billion dollars to bail a business out of trouble your money is worth a little less.

That's fine & all, but their letter completely overlooks the negative long-term financial growth of the airline industry due to SkiFree Monsters eating their profits.

@EBounding: The difference is that airlines are speculators that will take delivery of the contracts. Well, effectively...

@hwyengr: Yeah...I know. Did you read the rest of my post though? :/

This is totally lame. They are just looking for an excuse for firing employees and raising prices. Yes, I know airlines are in trouble, but regulations will NOT solve the oil price problem. It's supply/demand. Duh. It CAN'T be solved, except through conservation and alternative energy.
Airlines...just raise your fares already! Stop the nickel and diming with silly fees and surcharges.

I wish it was that simple, airlines of the US. The speculators are the only people insulating us from a jump spike in oil prices. Would going from $50/barrel to $200/barrel in a week be better for the economy? Certainly not. Everyone placing bets on the future is giving the world time to prepare for the time of Peak Oil, which we are now approaching, by smoothing out the increase in market price.

@Bladefist: As an American you have the right to a Hummer but you also get to enjoy the perks of a free market. I hate the high prices as much as anyone but just as people can buy and sell giant gas guzzlers, so too can speculators buy and sell oil. It sucks when those American freedoms to bite you in the ass doesn't it?

Let me get this straight...they cancel my flights, have random, unexplainable delays, charge me for baggage, treat me like crap, nickel and dime everything, etc. etc.

And now they want MY help?

Will they improve their service if I help them, or will the floggings continue?

That's what I want to know.

Just got this email, there is a link at the bottom of it to [capwiz.com] which is a form letter to send off. It does all the work for you.

@vladthepaler: Partly because airlines don't buy crude oil. They buy jet fuel. The speculation problem is at the crude oil stage before it gets to the refinery.

Personally, I just blame those infomercials years ago about how to make a huge fortune by investing in heating oil. Wasn't that a Kevin Trudeau thing, too?

Deregulate us!!
Regulate them!!

It's not just supply and demand. It's not just speculation. It's not just prices set in part by emotion with no basis in reality. It's not just the weak dollar. Humans love quick, simple problems with quick simple solutions. "If we all just don't buy gas from Exxon/Mobil today, the price will drop."

Economies are complex, slow-moving beasts that cannot be brought into line with single one-off actions. Controlling the rampant speculation is only one piece of the puzzle, but it is an important piece nonetheless.