I have written on the hidden danger of cheap oil before. However, at the time I penned my last article on the topic I would have defined “cheap” as $55 per barrel. Now, it appears that we may see $30 per barrel again.
Courtesy of Bloomberg
I’m sure someone can quickly calculate the price of $38.84 oil in let’s say 1999 dollars. Whatever that number is, I’m pretty sure it means that oil is historically cheap at the moment, and the results are flowing through to the bottom line at airlines worldwide, not just here in the U.S.A.
The ex-airline guy in me spends a little time surfing the internet, soaking in information, and talking to former colleagues. One thing is certain – dollar signs are starting to appear in their eyes. The Delta pilot contract failure was warning shot one, followed closely by the Southwest F/A’s. Everyone in the business is at risk for getting punch drunk on cheap oil. Will airline managers and their colleagues find the right path forward? Only time will tell. Just something I was pondering on a Sunday evening following a cruise vacation.
-MJ, August 24, 2015
