FuelClub Discount

The airline, 75 per cent-owned by the Government, yesterday reported an annual net profit of $218 million, off 1 per cent on the 2007 year. Trading turnover rose 9.1 per cent to $4.667b.

A final 3.5c dividend increases the annual rate from 8c to 8.5c a share, excluding 2007’s special 10c dividend. The gross dividend yield of 12.686c gives a yield of 10.6 per cent, based on yesterday’s closing share price of 120, down 2c.

Chief executive Rob Fyfe said the volatility in fuel prices and uncertain economic conditions had made it difficult to accurately forecast a profit for next year. But the average cost of jet fuel would need to be below $US140 a barrel for the 2009 financial year for the airline to be profitable, he said.

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Crude oil prices, which have fallen by a fifth after touching a peak of $147 per barrel on July 11, is not only likely to provide relief for oil marketing companies but also result in substantial savings in country’s import bill by as much as $20 billion, if the prices stay at the current level.

For the three public sector firms- Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL)- the sharp drop in oil prices would mean corresponding reduction in loss for the petroleum products they sell below the production cost and more cash in hand to smoothly run their day-to-day operations.

At the current price level of US$116.9 per barrel for the Indian basket of crude oil, the under-realization loss for oil marketing companies is pegged at Rs180,000 crore for the financial year ending March 2008, around 25 per cent lower than the estimate when the price of oil nearly touched US$142 per barrel.

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As world crude oil prices plunge, small oil players on Thursday started implementing price cuts in their gasoline products.

SeaOil announced that it will cut by P1.00 per liter its gasoline prices starting 2 p.m. Thursday. This will be followed by Eastern Petroleum Corp. at 6 a.m. Friday.

Fernando Martinez, Eastern Petroleum president, said the prices of the company’s gasoline products will be slashed by P1.00 per liter at 6 a.m. Friday.

“We have decided that by tomorrow Eastern Petroleum will rollback gasoline prices at 6 a.m.,” Fernando Martinez, Eastern Petroleum president, told ABS-CBN’s morning show, “Umagang Kay Ganda.”

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Earlier in the presidential campaign, when John McCain and Hillary Rodham Clinton called for a summer holiday on the 18.4-cent-per-gallon federal gasoline tax, Barack Obama dismissed the tax-vacation as an election-year gimmick that offered financially-squeezed families “just pennies.” I wrote that, unlike Clinton and McCain, Obama “stood tall in opposing the gas-tax holiday.”

Now we know why. Obama must have seen the gas-tax holiday as a chump-change in the wondrous store of campaign gimmicks. When Obama panders, he panders big-time. Witness his proposed “emergency energy rebate” that - on the heels of this year’s $600 per taxpayer stimulus package rebate sent to taxpayers this year - promises additional $500 checks for American workers or $1,000 per family “as soon as this fall.” (Is there an income cap for how Obama defines eligible “working families?” The campaign did not get back to me on that by my deadline.)

To hear Obama, the check is practically in the mail.

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Customers of Alabama Power Co. might see their rates go up as customers of some other Southeastern utilities have seen due to rising costs for coal and natural gas.

Alabama’s utility regulatory commission instructed its staff Tuesday to look into the amount Alabama Power is receiving to cover its fuel costs. The Public Service Commission acted after Alabama Power reported that it spent $24.6 million more on fuel in June than it recovered from its customers.

Alabama Power spokeswoman Jan Ellis said the utility has discussed its rising costs for coal and natural gas with the PSC, but it is premature to say what might happen in the coming months.

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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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