Oil over $108 / Barrel

[Lear70]

The reality the only thing the government can do to make things better is...get out of the way.

Here Here!

 

[Wesb737fo]

Really? Based on what do you feel that way? I would agree we aren't hedged as well as in the "old" days, but certainly I would think we are hedged much better than the legacy carriers right now.

Here are the actual #'s from the latest earnings release for Full Year 2011.

Percent of estimated fuel consumption covered by fuel derivative contracts:

Average Crude Oil Price per Barrel
Up to $90: 64%
$90 to $95: 33%
$95-$105: 15%
Above $105: 39%

Our only weak spot really is if oil sits in the $95-$105 range for the entire year where we only have approx 15% protection. But, anything below $90 we are sitting pretty at 64%, and if oil really skyrockets above $105 we at least have 39% hedged which should significantly cushion us against the competition.

As always we have layered protection reaching out 3-4 years. The earnings release didn't have price/barrel #'s and I haven't taken the time to look them up in the 10-k.

2012: 60%
2013: 50%
2014: 45%

I just read a post on a financial web site message board saying " SWA hedges have run out .....big losses ahead " the author of the post went by general lee......couldn't be the same guy.... just a coincidence..right?

Thanks for the hedging numbers Max....I was going to look those up.

 

[RedDogC130]

I just read a post on a financial web site message board saying " SWA hedges have run out .....big losses ahead " the author of the post went by general lee......couldn't be the same guy.... just a coincidence..right?

Thanks for the hedging numbers Max....I was going to look those up.

Do you have a link.....not buying it

 

[B727Driver]

Laura Wright may have a bit more accurate info than Genital Lee.
Just take a peek at the analyst estimates for this year, don’t see big losses. Do you?

 

[Wesb737fo]

Relax there sizzle chest...I'm on your side. Apparently sarcasm doesn't translate well through the internet. I just thought it was funny that there is another general lee spreading fear and misinformation. If it isn't our GL then he has my apologies. Link below.




http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_S/forumview?bn=10963

 

[Flyer1015]

My pickup gets 15mph, and I drive it because (among other reasons) its paid for and reliable.

Taking on a loan to buy a new vehicle simply because of fuel economy is a financially stupid decision...

I assume you meant 15mpg, not mph. Anyway, buying a vehicle that gets 15 miles per gallon was the financially stupid decision for you.

 

[Flyer1015]

News flash.... The Libyan people HATE YOU! These people have NO IDEA what freedom is or what democracy entails. They (as does the rest of the Middle East) know how to demonstrate and scream death to America, Israel, Europe, etc.

Blanket, biased statement. The UAE for example has not had multiple marches of death to America, death to Israel. The Libyans don't hate me, but they do hate America's foreign policy, one sided support for Israel, and America's lackadaisical attitude on starting unnecessary wars.

As soon as Gaddafi is gone they will all be standing with their hands out looking for the government to supply them with food, shelter, and medical aid.

And are we any different as Americans? Government handouts? Hmmm, where have I heard that before? The "food, shelter, and medical aid" you mentioned exists here as social welfare checks and medicare. And we, the hard working people, pay out of our pockets for those who don't work. And now they want 'free' healthcare. Those who live in a glass house really shouldn't throw stones. So what if the Libyans want food, shelter, and medical aid? Any developed nation, like the US, offers programs in those departments. The problem is getting a government form that has a *good* plan to pay for those things.

When they don't get it guess who they are gonna blame......wait for it...... America, Israel, Europe, etc. These people don't know what a democracy is let alone how to form and maintain one. As soon as they realize that in a democracy a Christian and a Jew have equal rights to a Muslim the country gets burned down again.

They do know what democracy is, enough with the Christian and Jewish comments. Why are you making this religious? Bottom line is they have just had it with the tyrant dictator, and they want different. Like in Egypt, the military will eventually stop listening to Gadhafi, especially when he has ordered his military to execute its own citizens that are protesting. 2 fighter jet pilots ejected and crashed their jet because they refused to carry out bombing orders over their own people. Just a matter of time before the military will relieve Gadhafi. Like in Egypt, the military will temporarily rule, and then elections will be held. The people want their voices heard. When you live under a tyrant, the want for democracy - people's voice - spreads.

I'm not saying that the average Libyan is a terrorist, but they have been led by one for almost 50 years. That alone makes the outcome of this latest uprising scary. I listen to some people with the "let freedom ring" stuff and it makes me laugh. It's almost as if they think the Libyan (Egyptian, Tunisian) George Washington is going to come charging into battle on his white horse demanding ALL people of these countries (including women) have equal rights and freedom. This is NOT 1776 and there is NO Libyan George Washington. However, there are plenty of Libyan and Egyptian radical groups chomping at the bit to get into power. Freedom and Democracy are great, but not all cultures and countries are suited for it. Name one successful Middle Eastern democracy (other than Turkey)..........

Yes, they've been led by a tyrant for 50 years. So get rid of him. Who are you to judge the average Libyan citizen? There are good people there, and good people who can become excellent leaders if given the chance. You're right about the lack of democracies in the Middle East. But I think that's gonna change, starting now.

 

[Mach92]

CNBC is reporting oil could top $220.00 barrel

 

[B-atch]

...I hope it hits $500/ barrel... This will bring the GLOBAL economy crashing down!!!....Then we'll see what happens to OIL....

This commodity has gone far enough..We are ALL slaves to its price and unstable tendencies.

 

[Always deferred]

I would be equally as concerned with a little-reported tid bit about the IMF considering replacing the dollar as the reserve currency. If this happens, $200/barrell oil would be cheap.

 

[BoilerUP]

I assume you meant 15mpg, not mph. Anyway, buying a vehicle that gets 15 miles per gallon was the financially stupid decision for you.

Yeah, I meant mpg.

15mpg is pretty typical of a 5+ year old 4x4 pickup with a large V8 engine. Sure I could have bought a Honda Civic and gotten better fuel economy, but such a vehicle doesn't meet my needs and even with $4/gal gas I'm still money ahead owning it free & clear vs. paying interest on a newer, more fuel efficient depreciating asset.

Considering I bought my truck in Oct. 2008 (when gas was about $3.50/gal), I knew what I was getting myself and you won't hear me complain about gas prices.

 

[BoilerUP]

Why did US light sweet crude hit $100/bbl and Brent hit $111/bbl today?

FEAR. Oil prices are swinging on emotion and speculative trading, not any real substantial loss of production and certainly not economic fundamentals.

CNBC says Libyan oil output is off 400,000 barrels per day, which is 25% of Libya's output...but only about 1.5% of OPEC's 29 million barrel per day output. To put that into perspective, the state of Texas puts out 850k+ bpd, Gulf of Mexico platforms put out 1.6M bpd, and a tropical storm or hurricane in the Gulf requiring platform evacuations typically causes a 400k bpd decrease in output.

The US Strategic Oil Reserve is full. The Cushing, OK West Texas Intermediate tanks are full. The Bakken Play in North Dakota, which was discovered recently, is the largest discovery of oil in 40 years.

There will be geopolitical spikes as these uprisings occur in oil-producing countries due to uncertainty, even temporary drop in output...but these will be short-term (<6 month) spikes, not sustained high prices, so long as nobody starts shooting at Israel.

 

[igneousy2]

...I hope it hits $500/ barrel... This will bring the GLOBAL economy crashing down!!!....Then we'll see what happens to OIL....

This commodity has gone far enough..We are ALL slaves to its price and unstable tendencies.

Somehow I doubt this.

If the global economy comes crashing down who is paying $500/barrel?

The US economy crashing down sure...The economy as we know it? maybe.

If oil is at $500/barrel then it means the "global" economy is doing just fine.

 

[Lear70]

Why did US light sweet crude hit $100/bbl and Brent hit $111/bbl today?

FEAR. Oil prices are swinging on emotion and speculative trading, not any real substantial loss of production and certainly not economic fundamentals.

CNBC says Libyan oil output is off 400,000 barrels per day, which is 25% of Libya's output...but only about 1.5% of OPEC's 29 million barrel per day output. To put that into perspective, the state of Texas puts out 850k+ bpd, Gulf of Mexico platforms put out 1.6M bpd, and a tropical storm or hurricane in the Gulf requiring platform evacuations typically causes a 400k bpd decrease in output.

The US Strategic Oil Reserve is full. The Cushing, OK West Texas Intermediate tanks are full. The Bakken Play in North Dakota, which was discovered recently, is the largest discovery of oil in 40 years.

There will be geopolitical spikes as these uprisings occur in oil-producing countries due to uncertainty, even temporary drop in output...but these will be short-term (<6 month) spikes, not sustained high prices, so long as nobody starts shooting at Israel.

Spot on.

And yes, General Lee comments on Yahoo Finance in airline stuff from time to time.

 

[UALjan15]

Why did US light sweet crude hit $100/bbl and Brent hit $111/bbl today?

FEAR. Oil prices are swinging on emotion and speculative trading, not any real substantial loss of production and certainly not economic fundamentals.

CNBC says Libyan oil output is off 400,000 barrels per day, which is 25% of Libya's output...but only about 1.5% of OPEC's 29 million barrel per day output. To put that into perspective, the state of Texas puts out 850k+ bpd, Gulf of Mexico platforms put out 1.6M bpd, and a tropical storm or hurricane in the Gulf requiring platform evacuations typically causes a 400k bpd decrease in output.

The US Strategic Oil Reserve is full. The Cushing, OK West Texas Intermediate tanks are full. The Bakken Play in North Dakota, which was discovered recently, is the largest discovery of oil in 40 years.

There will be geopolitical spikes as these uprisings occur in oil-producing countries due to uncertainty, even temporary drop in output...but these will be short-term (<6 month) spikes, not sustained high prices, so long as nobody starts shooting at Israel.

I believe that I heard that argument when oil prices spiked in '08. I don't disagree at all, but the harm done during that 6 month spike was very real indeed. Anyone who's bottom line was affected by gas prices suffered mightily. It does seem right now that airlines are raising fares to cover cost increases, which is encouraging. The SWA hedging advantage back in '08 put a serious damper on most airline's ability to raise fares.

 

[On Your Six]

CNBC is reporting oil could top $220.00 barrel

OPEC wants oil to be priced near $80 a barrel so people won't ditch their Escalades and buy Priuses. They don't want people to change their habits, or Governments to follow the will of the people, which could slap a profit tax on those greedy oil companies. (they suggested that last time). Oil supply would shoot up too, eventually bringing oil prices down again. Legislation prohibiting oil speculation at any level would be next, which would be good IMO, even though airline hedging is a form of that.


OYS

 

[On Your Six]

I believe that I heard that argument when oil prices spiked in '08. I don't disagree at all, but the harm done during that 6 month spike was very real indeed. Anyone who's bottom line was affected by gas prices suffered mightily. It does seem right now that airlines are raising fares to cover cost increases, which is encouraging. The SWA hedging advantage back in '08 put a serious damper on most airline's ability to raise fares.

Looks like SWA is now acting like a legacy(the NY Times even stated that today in one of their articles). They now go along with fare hikes, probably because they know they will have to start paying more to their new Airtran/SWA employees eventually.

OYS

 

[KNOTS]

OPEC wants oil to be priced near $80 a barrel so people won't ditch their Escalades and buy Priuses. They don't want people to change their habits, or Governments to follow the will of the people, which could slap a profit tax on those greedy oil companies. (they suggested that last time). Oil supply would shoot up too, eventually bringing oil prices down again. Legislation prohibiting oil speculation at any level would be next, which would be good IMO, even though airline hedging is a form of that.


OYS

hedging should be allowed only if you plan on taking delivery of the commodity--- if you don't plan on using it, you shouldn't be allowed to drive the price of it.

 

[igneousy2]

hedging should be allowed only if you plan on taking delivery of the commodity--- if you don't plan on using it, you shouldn't be allowed to drive the price of it.

Who is going to enforce this? Assuming it's enforceable at all? This would be only a temporary fix. The United States does not have a monopoly on futures contracts. Institutions/people would simply setup markets for them overseas. This would be bad because it will shift capital away from this coutry which hurts all of us.

You want a "excise profits tax"...yet another good idea...keep taxing Exxon everytime they make "too much" money. There are several problems with this...

1st, it removes the incenvtive for Exxon, Chevron, etc. to invest in their businesses which is what we NEED them to do when oil is at $100/barrell if there is to be any hope of us having cheaper gas. We want these companies drilling all the rights that we have given them...and now. We threaten to take away whatever profits they make everytime the price of oil spikes...and yet, we are surprised to watch 60 minutes and learn that these oil companies have large amounts of drilling rights that they are not using. Instead they are investing in Saudi Arabia and Canada and South America and Africa. So demand from Asia continues to rise but one of the largest oil producing countries in the world (1.Russia, 2.Saudi, 3.USA) puts a damper on its production SENDING PRICES EVEN HIGHER. WHAT A BUNCH OF GENIUSES.

2nd, it is too easy for Exxon, etc. to usurp. If I can think of how to usurp these laws - I know they have thought of it to. If i'm Exxon I move my headquarters to a more business friendly country...say Singapore. I then spin off a US distribution company and headquarter it in Houston. My Singapore company is not traded in the Untied States at all. I enter into a 99 year exclusive distribution agreement with my distribution company. They only buy from me and they make very little money doing it.

3rd, we send a signal to all other current and future companies that there is yet ANOTHER reason to avoid doing business in the United States.

Finally, we are a country that became the largest economy in the world because we were the free market of the world. We don't have an exclusive on this any longer. Shouldn't we stop biting the hand that has fed us.


This is the same thinking that has gotten us to where we are in manufacturing. It is more profitable to ship materials half way around the world, manufacture them, and then ship them half way around the world again to be sold in a store cheaper than the same product made across the street. Yeah, right it's those greedy corporations, it has nothing to do with the tax and labor laws of this country.

Nobody wants to tell the American people the truth. You do have a choice you either can't afford the Hummer, need to buy more fuel efficient cars; take the time to insulate your homes, maybe a family of 4 doesn't need 2500/sf of climate controlled living space; OR you relax environmental regulations and let the companies drill (i.e. ANWR) and build more refineries. But you CANNOT have it both ways as our politicians would have you believe. All of there solutions are almost always temporary and simply kick the can down the road to the next guy.

The market speaks through prices...$100/barrell oil is the market screaming USE LESS/DRILL MORE <----sorry, but these are the ONLY two choices that can effect prices long term and any solution not consisting of some combination of ONLY these two things are politicians simply playing to their populist constituents and dangerous.