CEOs
Posted at 9:49am on Jul. 10, 2008 Airline Industry CEOs Hoping You’re As Ignorant About Economics As Everyone Thinks You Are
Um, Guys? Speculators Aren’t Your Problem
By blackhedd
I’m going to avoid linking to this because you can find it yourself, and because I don’t know who the original authoritative source is. But you’ve certainly heard that a dozen CEOs of major US airlines, including all the big names, have put out a letter urging you, their customer, to agitate for more regulation of the commodities-futures markets.
Unfortunately time is too short to fully consider the issues raised in this carefully-written letter. The basic idea is something you’ve heard me discuss several times now: speculation in crude-oil futures and derivatives is raising the price.
That’s true enough, as I’ve said before. It’s also true that the airline industry is under as much pressure from high oil prices as anyone else (more on that in a moment).
What’s not true is that speculative pressure (or more precisely, buying pressure originating ultimately from institutional investors) is a permanent support for the price of oil. Thus, the conclusions reached by the airline CEOs are wrong, but they’re wrong in ways you wouldn’t expect from experienced business people.
Read on…
Posted in Airlines | CEOs | Economy | Oil Prices | regulation | speculation — Comments (19)/ Email this page » / Read More »
