Fuel hedge's

[NewHampshire Black Bears]

Undoubtedly, AA will fuel hedge, but when, and at what price ??

With the current gas roller coaster ride UNQUESTIONABLY being driven by DUMBYA to hang onto GOP control of congress, I'd expect AA to have to make a MOVE/hedge soon.

????????

NH/BB's

 

[Bill]

Undoubtedly, AA will fuel hedge, but when, and at what price ??

With the current gas roller coaster ride UNQUESTIONABLY being driven by DUMBYA to hang onto GOP control of congress, I'd expect AA to have to make a MOVE/hedge soon.

????????

NH/BB's

I was thinking the same thing just a few days ago.
Maybe that will be the month end announcement. :huh:

?????????????

 

[eolesen]

You really believe that we (the US) have any control over oil prices?

Wonders never cease.

The reason for the price drop off is pretty simple --

1) a lack of Cat5 hurricanes impacting the Gulf so far (I'm sure that Karl Rove controls the weather somehow)

2) commodity traders, worried that prices are too high to last, are selling their oil holdings

2) Gulf refining capacity finally coming back fully online after Katrina and Rita

3) The end of summer. The number of people driving on vacations drops drastically, reducing demand.

4) The one thing you can blame on Bush: federal requirements for clean air, summer-blend gasoline end next month, making gasoline cheaper to refine and import.

It's also no coincidence that prices started to dropoff after announcing the discovery of deep water Gulf of Mexico reserves earlier this month, which essentially let Thug-o Chavez and the Arabs know it's better to offer us cheap oil than it is to start tapping into those reserves.

 

[Bill]

Geez FM, it was just a question.


But thanks for that "lesson" anyway. :mellow:

 

[Hopeful]

You really believe that we (the US) have any control over oil prices?

Wonders never cease.

The reason for the price drop off is pretty simple --

1) a lack of Cat5 hurricanes impacting the Gulf so far (I'm sure that Karl Rove controls the weather somehow)

2) commodity traders, worried that prices are too high to last, are selling their oil holdings

2) Gulf refining capacity finally coming back fully online after Katrina and Rita

3) The end of summer. The number of people driving on vacations drops drastically, reducing demand.

4) The one thing you can blame on Bush: federal requirements for clean air, summer-blend gasoline end next month, making gasoline cheaper to refine and import.

It's also no coincidence that prices started to dropoff after announcing the discovery of deep water Gulf of Mexico reserves earlier this month, which essentially let Thug-o Chavez and the Arabs know it's better to offer us cheap oil than it is to start tapping into those reserves.

Damn fine analysis

 

[eolesen]

When to hedge is a legitimate question.

The bigger question I have is how much did AMR overpay for hedges based on incorrect assumptions that oil prices were going to stay as high as they've been?

Six months ago, there were a lot of accusations from various people about how AMR really screwed up by not hedging more of its 2006 fuel bill. This drop in prices is a great example of why hedging isn't always the best option in a volatile market, so perhaps AMR won't be jumping into large hedges at all right now...

As for the rest, forgive me if I feel a bit compelled to play Mythbuster by providing simple facts to rebutt the Dimocrat agenda of the week....

 

[Bill]

Then don't forget about the (GOP) club up on the hill. Elections are right around the corner. Don' think they WON'T take some credit for this.

Makes ya' wanna say hmmmm!!

 

[LGA Fleet Service]

Undoubtedly, AA will fuel hedge, but when, and at what price ??

Speaking of hedges...


Fuel hedges may hurt UAL, others as oil price drops

(Reuters) — A sharp drop in oil prices in recent weeks has been an unexpected boon to the recovering U.S. airline industry, but some airlines will not see the full benefit, having locked in prices nearer this summer's peak.

Continental Airlines, American Airlines-parent AMR Corp. and UAL Corp., the parent of United Airlines, have all hedged a portion of their third-quarter jet fuel needs above current prices, which could increase their costs.

Rest of article here:

Crains

 

[eolesen]

Then don't forget about the (GOP) club up on the hill. Elections are right around the corner. Don' think they WON'T take some credit for this.

Absolutely. If the Dims are going to use rising gas prices and poor economic indicators against the GOP, then by all means the GOP should take credit when prices fall and the ecomomic news is good.

 

[NewHampshire Black Bears]

You really believe that we (the US) have any control over oil prices?

Wonders never cease.

The reason for the price drop off is pretty simple --

1) a lack of Cat5 hurricanes impacting the Gulf so far (I'm sure that Karl Rove controls the weather somehow)

2) commodity traders, worried that prices are too high to last, are selling their oil holdings

2) Gulf refining capacity finally coming back fully online after Katrina and Rita

3) The end of summer. The number of people driving on vacations drops drastically, reducing demand.

4) The one thing you can blame on Bush: federal requirements for clean air, summer-blend gasoline end next month, making gasoline cheaper to refine and import.

It's also no coincidence that prices started to dropoff after announcing the discovery of deep water Gulf of Mexico reserves earlier this month, which essentially let Thug-o Chavez and the Arabs know it's better to offer us cheap oil than it is to start tapping into those reserves.

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OK Eric, tell you what;

I'll DEFER to your theory's for now.
BUT be FORWARNED, if gas prices "shoot up" suddenly, AFTER the elections, You and I will have a VERY interesting discussion !!!!!!


NH/BB's

 

[eolesen]

Better check the layers of tin foil on your hat, G.

 

[FA Mikey]

Absolutely. If the Dims are going to use rising gas prices and poor economic indicators against the GOP, then by all means the GOP should take credit when prices fall and the ecomomic news is good.

Can they? Other than the top 1% wage earners, who among us is better off today VS 6
years ago?

 

[NewHampshire Black Bears]

Better check the layers of tin foil on your hat, G.

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For someone who stated to me, to be an Independent Voter, I fear ERIC, that you spent TOO MUCH time in TEX.A$$, in that brutal heat, and "overdosed" a time or two, on the AA/HDQ/Kay Bailey Hutchinson/John Cornyn KOOL AID !!

Hopefully over time, with the "new change", that the symptoms will disapate.

Curious, was it on your LAST day in HDQ, that they removed The CHIP ???


NH/BB's

 

[The Drunken Duck]

Speaking of hedges...
Fuel hedges may hurt UAL, others as oil price drops

(Reuters) — A sharp drop in oil prices in recent weeks has been an unexpected boon to the recovering U.S. airline industry, but some airlines will not see the full benefit, having locked in prices nearer this summer's peak.

Continental Airlines, American Airlines-parent AMR Corp. and UAL Corp., the parent of United Airlines, have all hedged a portion of their third-quarter jet fuel needs above current prices, which could increase their costs.

Rest of article here:

Crains

It's hard to say if a hedge will hurt you. Most airlines, at least in Europe, often enter into 3-way structures where the sell a put, buy a call and then sell and out of the money call. This allows them to fund the zero-premium collar with a lower ceiling, with the risk that the sold call gets triggered if prices spike. This structure allows lets the airline participate in price drops to the put level. These structures tend to be most attractive under certain volatility conditions. So AA and all airlines are benefiting to some degree I would suspect. Plus, price drops in energy costs are good for consumers, who fly.

I doubt AA could hedge a large portion of its fuel exposure. Most ibanks wouldn't want to take significant unsecured credit exposure to any airline, particularily a US legacy carrier. If AA has a Credit Support Agreement in place and traded heavily, they could have an issue of posting collateral to the bank when they don't have that much cash.

 

[The Drunken Duck]

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For someone who stated to me, to be an Independent Voter, I fear ERIC, that you spent TOO MUCH time in TEX.A$$, in that brutal heat, and "overdosed" a time or two, on the AA/HDQ/Kay Bailey Hutchinson/John Cornyn KOOL AID !!

Hopefully over time, with the "new change", that the symptoms will disapate.

Curious, was it on your LAST day in HDQ, that they removed The CHIP ???
NH/BB's

NHBB, FM's analysis is pretty accurate (the investor community involvement is a bit more complicated). Oil is a fungible global commodity. It is pretty difficult to manipulate the price. I suspect that the President could try and convince Congress to allow drilling in Alaska and off Florida, but that seems unlikely. He could try and encourage alternative fuel use, but that is a structural long-term solution that wont solve the problems in the near term, especially since American's obsession with SUV's seems unrellenting. The best solution to high gas prices is ... this sounds weird ... but high gas prices. People respond to price signals.