Friday, July 28, 2006


Alex (who works at Standard Bank - Merchant Division)
sms'ed me last night to say that he may have made an error in terms of oil coming back down to $50 (as the experts are saying). So seems like an awakening is starting spread. I'm baffled that there's panic going around - prices are at records now, $75 - with no alternatives (or end in sight). I guess the reason why it's not bothering anyone is because the media keeps repeating long-shot or delusion options. This or that alternative, or tar sands that will save us.

There are 10 teachers absent today. I might have been aswell - I woke up feeling chilly and irritible. Jeane calling me first thing in the morning didn't help either.

I've also been spared one grade 10 class so that's going to make life easier.

Cycle race tomorrow and may do a short 30km cycle now after lunch. Feeling a bit crap though, which is not the best way to head into a weekend, buit I'll try to make the best of it. Take in a movie or something.

$100 oil would hit airlines, car makers hard, S&P says
Last Update: 3:38 PM ET Jul 27, 2006

NEW YORK (MarketWatch) -- If oil prices soared to $100 a barrel, U.S. growth would slow significantly and the automotive and airline industries would be hit particularly hard, said analysts at Standard & Poor's.

"Even a $100 [oil] price will not result in a U.S. recession," but it will trim U.S. GDP next year by about 1.5%, said David Wyss, chief economist at Standard & Poor's, in a conference call on Thursday.

Crude oil for September delivery was last trading up 31 cents at $74.25 a barrel on the New York Mercantile Exchange on Thursday. Crude has rallied recently on supply worries and global political tensions, particularly violence in the Middle East.

Although Standard & Poor's is not forecasting that oil prices will climb to $100 a barrel, economists at the ratings firm discussed the potential impact of such a hike on various industries.

Oil prices at $100 a barrel would be "extremely negative" for the credit profile of U.S.-based automotive companies such as Ford Motor Co. said Robert Schulz of Standard & Poor's.

A significant rise in oil prices would also hurt the American airline industry, which has already experienced a dramatic increase in fuel prices in recent years. While jet fuel cost about 80 cents per gallon on average in the period 2000-2003, prices climbed to $1.50 per gallon in 2005 and $1.95 per gallon during the first five months of this year.

In contrast to freight transportation companies which can rely on fuel surcharges, airlines have to raise airfares to keep up with soaring fuel costs.
"Airlines would be one of the industries at greatest risk in a $100 oil scenario," said Philip Baggaley of Standard & Poor's.

1 comment:

Daniel said...

Oil price dropping is not going to happen. It might drop 2-4 $'s per barrel, and then within a week or two it will gain and rise to a higher figure. Amazing how few people realise this. Are you still thinking of buying a new car, Nick? Tickets to South Africa have increased by 30% here in asia. Without a doubt you will see many airline companies go under. We're paying more for traveling, spending more on daily necessities and slowly rates are going up. Credit card debt in USA, Taiwan, Japan, S-africa at an all time high. Who has money to throw around?? Hope to come and visit you in Bloemfontein early next year!