Archive for August, 2008
August 8th, 2008
Oil dropped $5 today, as the U.S. dollar rose and investors seemed to say “Well, the run was fun while it lasted.”
Could it be prices peaked? Oil’s at the lowest it’s been since early May, and even a major pipeline fire and rebel turmoil in Turkey can’t sent prices up. At its worst, the oil market jumped when the wind changed direction.
Gasoline has been creeping down, prompting James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com, to say, “We’re probably going to see gasoline at the retail level around $3.50 for Labor Day.”
For now, though, Road Ranger’s Web site is reporting gas prices going up today. No movement on our new Gas Tracker feature though. Check it out, and add prices you see. The more trackers we have, the better information we’ll have.
Here’s the situation in the metro area, state and nation (prices courtesy of AAAs fuelgaugereport.com):
Gasoline: Rockford dropped more than two cents this morning to $3.84 a gallon, down 36 cents from the record high July 16. We’re up to fourth in the state in gas prices, as some other markets dropped more. The Illinois average dropped less than a cent to $3.95. The national average dropped more than a cent to $3.83. Illinois dropped to 13th-highest gas prices in the nation (including the District of Columbia).
Diesel: Rockford dropped more than three cents to $4.48 a gallon, down 33 cents in the past month. We have the ninth-highest (third-lowest) diesel prices in the state. The state average dropped more than two cents to $4.62, down 22 cents in the past month. The national average dropped more than two cents to $4.59, down 22 cents in the past month. Illinois has the 22nd-highest prices in the country (including the District of Columbia).
August 8th, 2008
Allegiant Air, as you may have heard, is one of few airlines boasting a profit these days. The biggest airline making a profit, Southwest Airlines, is only doing so because of its lauded fuel hedges … airline economist Darin Lee told a group of journalists yesterday that SW is otherwise underperforming competitors.
So what Allegiant is pulling off is rather special. And Lee called their 95 percent load factors (how full the planes are) last month “unheard of”. How unheard of? According to Air Transport Association data Lee gave us, load factors for U.S. airlines have increased from 62 percent in 1990 to 80 percent last year.
(”Oh no, I’m sitting next to the chatty reporter!”)
They’ve been packed at RFD. In June, all Allegiant flights in and out of RFD were 97 percent full, according to the airport. In July, they were on average 96 percent full. I asked Robert Ashcroft, Allegiant’s vice president of planning, about this stuff for a story. He said more interesting things than I could fit there, so here’s the full text:
1. Allegiant’s routes out of RFD have load factors at the same level of the airline’s impressive national average. Is that a sign that they’re doing well for Allegiant, and that the seasonal adjustments are at the level they need to be? Another way to ask that is, if fuel prices stabilize at the current level, do your foresee the need for any other adjustments at RFD?
“A corporate goal for the last six to 12 months has been to run the airline as full as possible, so pretty much all our markets are showing very high load factors. The real issue is whether we can fill the flights at decent fares or not. Overall RFD appears to be doing fine, which doesn’t mean we might not add or subtract frequencies on particular routes from RFD.”
2. Why is it important to have such high load factors? Obviously, the fuller the plane, the more efficient the operation … but you’ve gone above and beyond other airlines. Does that give you a competitive advantage?
“Two motivators: the first is to reduce the cost of fuel per passenger. We burn only slightly more fuel if we add another passenger to the aircraft, so fuel cost per passenger declines as we increase the number of people on board. The second motivation is that we appear to be pretty good at getting a steady amount of so-called ancillary revenue (for the charges we levy for things like drinks, advance seat selections, car rentals, hotel rooms, etc) per person. So, the more people we carry, the more ancillary revenue we get.
“The competitive advantage is really that our type of airline (leisure-oriented, selling only nonstop flights, no connections, etc) lends itself better to flying full aircraft than other airlines. 95% full aircraft, such as we did in July in our scheduled service, is really unheard of, and probably infeasible for more traditional airlines.”
3. Have customers reacted to how full planes are … complaining about feeling crowded at all? What feedback, if any, have you had recently?
“Haven’t seen any such feedback, yet. One thing that may be making it a bit more bearable is that the seats in our aircraft are actually relatively far behind each other compared to many other airlines. So people still have a decent amount of leg room, even when the airplane is full. Still, an empty seat next to you is pretty hard to come by on Allegiant at the moment.”
August 8th, 2008
Oil prices are tumbling and gas prices are starting to follow, as domestic consumption drops. Basically, people are driving less and/or switching to smaller cars. But if prices fall to a certain level, will we go back to our old ways and our old vehicles? Will demand pick back up?
How far do gas prices have to drop before you'll drive like you used to?
August 7th, 2008
Though oil prices rose back over $120 a barrel today because of a Turkish pipeline fire, analysts suggest prices will continue their general downward trend because of falling demand. Meanwhile, fuel prices keep slipping slightly.
Check out our new Gas Tracker feature to see where the best prices in your town are, and add prices you see. The more trackers we have, the better information we’ll have. And please, keep it to Rock River Valley gas stations … I don’t want to cover Tulsa!
Here’s the situation in the metro area, state and nation (prices courtesy of AAAs fuelgaugereport.com):
Gasoline: Rockford dropped two cents to $3.87 a gallon. We’re down to fifth in the state in gas prices. The Illinois average dropped a cent to $3.96. The national average dropped more than a cent to $3.85. Illinois rose to 12th-highest gas prices in the nation (including the District of Columbia). AAA shows an interesting chart on national trends:
You’ll notice that, yes, gas prices are falling slower than oil and wholesale gas prices.But that’s because the gap between those has been smaller than average since the oil run-up started, and retailers are recovering some margins. If the chart went back farther, you’d see that oil rose faster than gasoline last year
Diesel: Rockford dropped a fraction of a cent to remain at $4.52 a gallon, down 31 cents in the past month. We have the ninth-highest (third-lowest) diesel prices in the state. The state average dropped almost two cents to $4.64, down 19 cents in the past month. The national average dropped two cents to $4.61, down 19 cents in the past month. Illinois has the 20th-highest prices in the country (including the District of Columbia).
August 7th, 2008
By now you’ve heard that RFD’s flights to Denver - and its fledgling day trip program - are ending. Denver was a big money loser - to the tune of $600,000-$700,000 because fuel is so high and the planes weren’t full. Had a conversation with a friend who commented that they “wanted too quick results” but you can’t justify losing that much money at a time like this. He also wondered if lack of frequency killed it, but A. United couldn’t make money with daily service in this environment and B. I’m not sure RFD could have gotten a deal that would have given them an affordable plane for daily flights.
There may be a lot of “woulda, coulda shouldas” on the post-mordem, but it comes down to another route failing in a country of failing air routes. High fuel prices = high fares. High fares + economic questions = decline in leisure traffic. So it goes. But give the folks at RFD credit for being willing to try, and the knowledge to know when to give up.
The day trips were breaking even, and by any reasonable measure were an overwhelming success. But they’re ending because the deal with Southern Skyways required a certain number of flight hours, and the airport couldn’t pack enough day trips to meet that minimum.
Will day trips come back? The airport sure hit on something with sold out flights to Niagara Falls, Indianapolis and Mackinac Island. But finding a deal with an airline to have planes available for non-regular service would be tough. Perhaps a deal with Rockford-based Ryan International Airlines sometime? Or we just may have to wait until things pick up…
August 6th, 2008
Oil prices dropped below $118 today after the U.S. Energy Information Administration reported that oil inventories rose more than expected. Meanwhile, the EIA reported that gasoline demand was down 2.3 percent last month year-over-year. There’s no sign that under-$4 gasoline is going to immediately reverse that trend.
Galena-based analyst Jim Ritterbusch said, “I think we need to drop another 30 or 40 cents a gallon before we really see any change in driving habits.”
How far down will prices have to drop before you’ll start driving more? What would it take to send you back to your SUV or truck? Or are you going to retain your new driving habits even if prices fall?
For now, just another slight drop, at least as of this morning (prices courtesy of AAAs fuelgaugereport.com).
Gasoline: Rockford dropped more than a cent to $3.89 a gallon. We’re still fourth in the state in gas prices. The Illinois average dropped less than a cent to remain at $3.97. The national average dropped a cent to $3.86. Illinois still has the 13th-highest gas prices in the nation (including the District of Columbia).
Diesel: Rockford rose almost a cent to $4.52 a gallon, but still down 29 cents in the past month. We also now have the second-lowest diesel prices in the state (above only Bloomington at $4.48). The state average remained at $4.66, down 16 cents in the past month. The national average dropped a cent to $4.63, down 17 cents in the past month. Illinois has the 22nd-highest prices in the country (including the District of Columbia).
August 5th, 2008
Further proof why Ben Mutzabaugh of USA TODAY has the coolest job - a photo gallery of Emirates’ new A380 that made its first flight to the U.S. Friday. He’s also got some other coverage of the massive plane and other developments regarding airlines flying it.
 
(That’s one, two, three jetbridges)
Ben also shot some videos and will devote much of his Wednesday chat to the subject.
August 5th, 2008
Oil dropped as low as $118 today, and has fallen for four straight weeks for the first time since December. The causes continue to be falling demand, a strengthening dollar and what I’ve referred to before as the “accelerating effect” of speculation. Speculators don’t seem to be the ones that move the market, they just accelerate the direction, and now they’re pulling out and accelerating the decline.
The main questions today, though, are what affect will the latest Chinese earthquake have on oil prices, and at what point do prices drop enough that demand starts going back up?
Here are the prices, at least as of this morning (courtesy of AAAs fuelgaugereport.com).
Gasoline: Rockford dropped a fraction of a cent to $3.90 a gallon as retailers wait to see if the oil drop is for real this time. We’re still fourth in the state in gas prices. The Illinois average dropped a cent to $3.97. The national average dropped a cent to $3.87. Illinois has the 13th-highest gas prices in the nation (including the District of Columbia).
Diesel: Rockford dropped more than a cent to $4.51 a gallon, down 27 cents in the past month. We’re tied with the ninth-highest diesel prices in the state. The state average remained at $4.66, down 16 cents in the past month. The national average dropped a cent to $4.64, down 15 cents in the past month. Illinois has the 22nd-highest prices in the country (including the District of Columbia).
August 4th, 2008
Oil has dropped $4 today, down to around $121 a barrel, as Tropical Storm Edouard decides not to mess with the Gulf Coast.
The AP story makes a spurious point, noting that, “Gas has fallen 5.6 percent since hitting an-all time high above $4 a gallon on July 17, but so far hasn’t kept up with oil’s steep descent, suggesting struggling filling stations are still saddled with gas bought when crude prices were higher.”
Or, you know, suggesting that filling stations took a hit when prices were higher and are now catching up so they can have a decent profit. It’s never as simple as “how much they paid for product directly corresponds to how much they charge.” They have to look at the big picture and adjust prices so at the end of the year they made a decent margin.
You never hear people say “Oil prices are still 73 percent higher than they were a year ago, but gasoline prices are only 33 to 36 percent higher.” What am I missing here.
Here are the prices, at least as of this morning (courtesy of AAAs fuelgaugereport.com).
Gasoline: Rockford dropped a fraction of a cent to remain at $3.91 a gallon. We’re up to fourth in the state in gas prices. The Illinois average remained at $3.98. The national average dropped almost a cent to $3.88. Illinois has the 13th-highest gas prices in the nation (including the District of Columbia).
Diesel: Rockford dropped almost eight cents to $4.53 a gallon, down 25 cents in the past month. We have the eighth-highest diesel prices in the state. The state average dropped two cents to $4.66, down 15 cents in the past month. The national average dropped a cent to $4.65, down 13 cents in the past month. Illinois has the 22nd-highest prices in the country (including the District of Columbia).
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