Gas price vibe check
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What is the main topic discussed in this episode?
There's a lot going on right now. Mounting economic inequality, threats to democracy, environmental disaster, the sour stench of chaos in the air. I'm Brooke Gladstone, host of WNYC's On the Media. Want to understand the reasons and the meanings of the narratives that led us here and maybe how to head them off at the pass? That's On the Media's specialty. Take a listen wherever you get your podcasts.
On the show today, jet fuel, gas, and diesel. A lot of our economy still runs on them. From American Public Media, this is Marketplace.
In Denver, I'm Amy Scott, in for Kai Risdahl. It is Tuesday, March 17th. Good, as always, to have you with us. We are now into Day 18 of the war in the Middle East. Commercial airspace in much of the region remains closed. Oil prices are fluctuating, but high, above $100 a barrel for Brent Crude, the international benchmark. And here in the United States, airport lines keep getting longer as the partial government shutdown of the Department of Homeland Security stretches into a second month and more TSA agents don't come to work. You see where I'm going here. All of this is adding up for airlines. Marketplace's Samantha Fields has the 30,000-foot view of the business of flying right now. Just a few weeks ago, airlines were paying about $2.50 a gallon for jet fuel.
Today, it's closer to $4 a gallon. That is putting extreme financial pressure on airlines. Charles Duncan at Altitude X Aviation Group says no one has any idea how long these high fuel prices will last.
which makes it nearly impossible to plan for. So I think everyone is, you know, taking it day to day, week to week.
The same is true with the closure of commercial airspace and the severe disruptions at key airport hubs in the Middle East, including Dubai, Doha and Abu Dhabi.
The industry has really had to shift capacity and passengers have had to scramble to find new ways to travel globally.
The options for flying from Europe to Asia have narrowed, and Mike Stengel at Aerodynamic Advisory says in many cases the new routes are longer. These detours can add significantly to flight time, which means more fuel. And higher costs. Airlines based in the Gulf are more affected than others.
How are rising jet fuel prices and Middle East airspace closures affecting airlines' costs and operations?
But Stengel says all are scrambling to adjust their operations and account for spiking fuel prices. If I were an airline executive, fuel would be my number one concern on cost items. Airline profits are highly sensitive to changes in fuel prices. And Dan Akins at Flightpath Economics says as much as they can, airlines will pass higher prices on to consumers.
The problem is once you start doing that, you destroy some of the demand.
There's another problem, too, he says. It's not just higher airfares that could make people less inclined to fly. It's also safety concerns over the conflict in the Middle East, plus long security lines and staffing shortages at U.S. airports because of the partial government shutdown.
Combined, all of the micro elements of this have the makings of a bigger macro problem.
For now, demand for air travel is still strong. But the longer the war in Iran and the shutdown drag on, the more the risks mount for airlines and for the economy. I'm Samantha Fields for Marketplace. On Wall Street today, the major indices closed higher. We'll have the details when we do the numbers.
We've been talking a lot about the price of fuel in recent days because it matters to people's personal finances, of course. But gas prices also have a psychological effect. The National Association of Convenience Stores found that 70 percent of consumers say gas prices affect their view of the economy. In reality, though, the oil market is mostly its own beast, driven by OPEC, inventory, and, as we're seeing now, geopolitical events. So why do so many Americans gauge the health of the economy by the cost of fuel? Marketplace's Kristen Schwab looks at Americans' unique relationship with gas and the cars it powers. There are few people more sensitive to gas prices in New York City than taxi drivers.
Rauf Qadir is fueling up his yellow cab at a BP gas station near LaGuardia Airport before his shift.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:01–2:39
2
How are rising jet fuel prices and Middle East airspace closures affecting airlines' costs and operations?
2:39–8:20
3
What do airlines expect to do when jet fuel jumps from about $2.50 to nearly $4 a gallon?
8:20–11:38
4
How are flight detours around Dubai, Doha and Abu Dhabi changing route lengths and fuel consumption?
11:38–23:26
5
Why do Americans emotionally equate retail gas prices with the health of the economy?
23:26–26:51