Friday, July 18, 2008

A scathing response to the airlines inane open letter demonizing oil speculators can be found here:

Dear CEOs of U.S. airlines:

I want to say thanks for the July 10 email you sent to all your customers seeking to explain why today's air travel experience is so painful. The letter, signed by 12 of you, explained that "oil speculators" -- presumably by betting on future oil prices -- are killing your industry and thus requested that I, as a consumer, pressure Congress to rein in this "unchecked" market "manipulation."

I admit that just lately I'd begun to feel that flying was something akin to having my intestines fished out with a long hook. Actually, I'd been wondering whom to blame for the fact that it would probably be cheaper, easier and maybe even faster to drive to wherever I want to go than to board one of your planes. Suddenly, all is clear.

She proceeds to sarcastically pin all her (numerous) encounters with airline inconveniences, screw-ups, and incompetence on the New York Mercantile Exchange. She finishes with a simple inquiry:
I have only one question: What the heck happened with Southwest? I seem to remember back in 2005, as oil prices were rising, Southwest used the oil market to "hedge" its fuel supply, locking in lower costs that gave it a competitive edge. Oh, now I get it. Southwest totally used the market to its advantage. Ha, ha. I bet those speculators are still beating themselves with flight manuals over that one.
Commodity markets are damned hard to manipulate - just ask the Hunt brothers. Besides, look at what banning speculation did to onion markets. Speculation reduces market volatility - it does not arbitrarily raise prices on a long-term basis.


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