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http://www.ajc.com/business/content...ml/Financial/AP.V9714.AP-Airlines-Oil-Pr.html
U.S. Airlines Blame Bush for Cost of Oil
By BRAD FOSS
AP Business Writer
WASHINGTON (AP)--The U.S. airline industry accused the Bush administration Thursday of recklessly driving up the cost of oil by purchasing unncessarily large amounts of petroleum for the nation's strategic reserves at a time when prices are already high.
``The government is out buying fuel, it appears, without much regard for the impact that it is having on prices,'' said James C. May, the chief executive of the Air Transport Association, the industry's main lobbying group.
May, speaking to a group of reporters at the association's headquarters in Washington, said oil purchases made by the Energy Department were adding enough demand to the world marketplace to drive up the price of oil by more than $6 per barrel, a major concern for airlines since jet fuel is their second biggest expense after labor.
Industry analysts attribute the high price of oil to tight supplies, rising demand because of the improving economy and fears about international terrorism.
The Energy Department did not immediately return a call seeking comment.
Each dollar increase in the price of oil translates into an additional 2-3 cents per gallon for jet fuel, according to the ailrine trade group. In October, airlines paid an average of 82.6 cents per gallon for jet fuel, about the same amount they paid a year ago.
The February crude futures contract was trading Thursday morning at $33.60 a barrel on the New York Mercantile Exchange.
May estimated that the impact of today's high oil prices on the airline industry was ``easily $2 billion,'' or an amount equivalent to nearly half the industry's total expected losses for 2003. He said the industry was in the process of crafting a formal complaint to the Bush administration about its fuel purchasing policies.
The Energy Department is in the process of filling the Strategic Petroleum Reserve, now at 638 million barrels, to its capacity of 700 million barrels.
Meantime, the nation's commercially available inventory of crude, which traders watch closely to gauge whether supplies are adequate, is 3 percent below last year's levels. For the week ending Jan. 2, commercial supplies stood at 269.0 million barrels, down from 277.5 million barrels a year earlier.
May does not oppose the policy of filling the reserve, but he said the government ``needs to be a little more careful about how it goes about buying fuel on the open market.''
AP-NY-01-08-04 1228EST
U.S. Airlines Blame Bush for Cost of Oil
By BRAD FOSS
AP Business Writer
WASHINGTON (AP)--The U.S. airline industry accused the Bush administration Thursday of recklessly driving up the cost of oil by purchasing unncessarily large amounts of petroleum for the nation's strategic reserves at a time when prices are already high.
``The government is out buying fuel, it appears, without much regard for the impact that it is having on prices,'' said James C. May, the chief executive of the Air Transport Association, the industry's main lobbying group.
May, speaking to a group of reporters at the association's headquarters in Washington, said oil purchases made by the Energy Department were adding enough demand to the world marketplace to drive up the price of oil by more than $6 per barrel, a major concern for airlines since jet fuel is their second biggest expense after labor.
Industry analysts attribute the high price of oil to tight supplies, rising demand because of the improving economy and fears about international terrorism.
The Energy Department did not immediately return a call seeking comment.
Each dollar increase in the price of oil translates into an additional 2-3 cents per gallon for jet fuel, according to the ailrine trade group. In October, airlines paid an average of 82.6 cents per gallon for jet fuel, about the same amount they paid a year ago.
The February crude futures contract was trading Thursday morning at $33.60 a barrel on the New York Mercantile Exchange.
May estimated that the impact of today's high oil prices on the airline industry was ``easily $2 billion,'' or an amount equivalent to nearly half the industry's total expected losses for 2003. He said the industry was in the process of crafting a formal complaint to the Bush administration about its fuel purchasing policies.
The Energy Department is in the process of filling the Strategic Petroleum Reserve, now at 638 million barrels, to its capacity of 700 million barrels.
Meantime, the nation's commercially available inventory of crude, which traders watch closely to gauge whether supplies are adequate, is 3 percent below last year's levels. For the week ending Jan. 2, commercial supplies stood at 269.0 million barrels, down from 277.5 million barrels a year earlier.
May does not oppose the policy of filling the reserve, but he said the government ``needs to be a little more careful about how it goes about buying fuel on the open market.''
AP-NY-01-08-04 1228EST
