FuelClub Discount

Not long ago LA/Ontario International Airport was setting growth records. Airlines flocked to the Inland Empire airfield in what Los Angeles Mayor Antonio Villaraigosa hailed as the “great first steps” to regionalizing air travel in Southern California.

In a much publicized event last year, the mayor even helped welcome the start of an airline’s service at Ontario by donning a safety vest and directing an ExpressJet plane to its gate.

Come September, ExpressJet will no longer operate at Ontario, becoming one of the latest casualties of high fuel costs and a souring economy, which have grounded airline service across the country. Other domestic airlines, such as United, Delta, Southwest and JetBlue Airways, have slashed or eliminated service at Ontario as well.

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U.S. airlines are cheering a steep decline in the price of jet fuel since mid-July, when crude oil began a nearly $27-per-barrel descent, but that good news may come with a slight sting for carriers that locked in fuel prices when oil was at its peak.

The risk is that oil may drift below the current price airlines guaranteed with hedging contracts, which are usually options. If that happens, the hedges carriers purchased could be a waste of money.

Worse yet, it is possible some airlines could be committed to paying more for their fuel than market prices.

“Given some of the hedging mechanisms they are using, they are going to be subject to significant losses on those portfolios. We’ve never seen such volatility on oil prices,” said Brian Nelson, equity analyst at Morningstar.

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Senator Barack Obama altered his position on Monday to call for tapping the nation’s Strategic Petroleum Reserve to lower gasoline prices as he outlined an energy plan that contrasts with Senator John McCain’s greater emphasis on expanded offshore drilling and coal and nuclear technology.

In a speech here and in a new advertisement, Obama, the presumptive Democratic nominee, also sought to portray his Republican rival, McCain, as “in the pocket” of oil giants that are profiting from gasoline priced at more than $4 a gallon. And in his speech, Obama called for a windfall profits tax on oil companies to finance rebates for Americans.

At the heart of Obama’s proposals is a focus on fostering alternative energy development by investing $150 billion in emerging technologies and renewable fuels. Seeking to put a million fuel-efficient hybrid plug-in automobiles on the road, he said that he would offer a $7,000 tax credit to buyers, the overall cost of which he did not specify. In addition, Obama said his goal was to have 10 percent of the country’s energy needs met by renewable resources by the end of his first term, more than double the current figure.

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European automakers’ efforts to persuade more Americans to buy cars with diesel engines are turning into an uphill battle because of rising prices at the pumps.

German manufacturers Volkswagen AG, Daimler AG and BMW AG have launched initiatives to make diesel cars more popular in the U.S. as they bet Americans will eventually overcome the perception that diesel engines are loud, smelly and polluting. But their plans appear to be stalling on the back of soaring oil prices.

“The recent price hike is a major blow for the companies’ initial plans to offer more cars with diesel engines in the U.S.,” said Global Insight analyst Roman Mathyssek. He said more-focused marketing efforts along with the diesel engine’s superior fuel efficiency still might be able to win over American customers, if the price for diesel eases again.
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Crude oil prices in recent times threatened to breach the $150 per barrel mark, and later fell to $123 levels, clocking an appreciation of almost 30% in the year. In fact, higher oil prices have been sending shivers down the stock markets worldwide, as if the recent global financial crisis was not enough to unnerve them.

Back home, Indian stocks are down by around 30% in the current year. Inflation has already reached double digits at 11.98% and is showing no signs of respite, adding fuel to the fire.

I would start with an interesting conversation I heard recently. I happened to be at an oil trader’s dealing room. I asked the chief dealer, “What’s happening to oil? It is down 20% from its peak. Will you buy now?” He answered: “Oil’s down due to speculative unwinding of long positions and a growth scare in developed countries, which might result in lower demand for the scarce commodity.”
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Energy companies are to be told to reallocate some of the £3bn they must spend to reduce carbon emissions towards directly helping the fuel poor, following uproar over last week’s decision by British Gas to hike gas bills by a third.

Amid widespread calls for a windfall tax on industry profits which could be used to ease the bills of the vulnerable, the government is working on compromise solutions intended to double companies’ spending on fuel poverty measures.

In a statement of priorities that will alarm climate change campaigners Malcolm Wicks, the energy minister, told The Observer: ‘If I said to an elderly woman I’m worried about global warming she would say “Chance would be a fine thing in my living room”. We are not going to sacrifice fuel poverty on the altar of climate change.’
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