Jet fuel prices soar as war continues
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How is the war in the Middle East affecting oil and jet fuel prices?
The widening ripple effects of the hit to the oil markets due to the war in the Middle East. Plus, a check-in on small businesses. From American Public Media, this is Marketplace.
In Washington, I'm Kimberly Adams in for Kai Rizdal. It's Tuesday, March 10th. Good to have you along. There are all sorts of estimates floating around, but experts and government officials are saying the war with Iran is costing the U.S. government up to $2 billion a day. In the private sector, the impact on oil markets and other commodities is already showing up in higher prices across several industries, including travel. Now, if you have any big summer trips planned, FYI, airfares are climbing as we speak. The problem is simple. As the price of oil goes up because of the war in the Middle East, so does the price of jet fuel. Now, the way airlines are responding, not quite so simple. Marketplace's Kaylee Wells explains.
Last time we saw a spike in jet fuel prices like this was at the beginning of the war in Ukraine. Fuel went up and airfare went up, but people paid up anyway. because during that time, there was just such a crazy level of demand for travel. It was during that revenge travel period. Meghna Maharishi is an airline reporter at travel industry news outlet Skift. She says back then, we were coming out of the pandemic craving to go somewhere with a bunch of saved-up money burning holes in our pockets. Today, demand for travel is still elevated, but not that elevated. So I think those increases are going to probably feel a little bit more painful today. More painful partly because higher oil prices mean less disposable income for consumers, says independent airline industry analyst Robert Mann.
Notably, leisure customers have to decide, well, you know, am I going to pay to light the house and heat the house and fill the fuel tank on the cars, or am I going to go buy airline tickets to see Mickey Mouse? The price hikes will likely target travelers who can afford them, says David Slotnick, contributing aviation editor for the travel site The Points Guy. If they see a $10, $20, $30 increase in their tickets and they're already spending $1,200 on a round-trip flight to, say, Japan, that's not something they're necessarily going to notice or be affected by. Which also means airlines that fly to Japan or elsewhere overseas are better positioned to weather this storm. But for the domestic and budget airlines?
Their customers are less likely to just absorb that without minding. And that might mean that those airlines need to absorb more of that cost themselves. Airline analysts are reluctant to offer booking advice right now with all the uncertainty surrounding the war, but Slotnick says he wishes he'd booked his family's summer trip to Europe weeks ago. I'm Kayleigh Wells for Marketplace. Wall Street today, everyone's still watching the oil markets. And, well, the administration's social media posts. We'll have the details when we do the numbers.
A bigger budget line for travel is yet another hit for businesses this year, already dealing with uncertainty around tariffs and weakening consumer confidence. That's probably why business confidence, small business confidence in particular, is also in a bit of the doldrums right now. The National Federation of Independent Business, or NFIB for short, is out today with its February Small Business Optimism Index, which is down for a second straight month, although the numbers have rebounded from the sharp dive the index took last April after President Trump's Liberation Day tariffs were announced. Marketplace's Mitchell Hartman has more. The NFIB's optimism index for February is just about average for the past 52 years that it's been compiled.
But one component of sentiment is running much higher than it has for decades, business uncertainty. Holly Wade with NFIB's Research Center says small business owners have plenty to be worried about. Inflation is still a pain point for many small business owners. The labor market, a large share are looking to hire, can't find applicants.
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