Airlines urge Congress to curb oil speculation
WASHINGTON - US airlines, reeling from record fuel prices, urged Congress to curb speculative trades because the industry "cannot continue to survive at $140 oil."
Measures to limit so-called index speculation are needed before Congress's recess next month, said James May, the chief executive of the Air Transport Association trade group.
Oil jumped as high as $147.27 a barrel in New York, a record, after the Jerusalem Post said Israeli war planes flew over Iraq. Crude for August delivery rose $3.43, or 2.4 percent, to settle at $145.08 a barrel on the New York Mercantile Exchange.
"There is no greater crisis," May said, adding that most airline business plans are built on oil at $85 to $90 a barrel. Prices at current levels will have "serious consequences" should they persist through the rest of 2008, he said.
Yesterday's conference stepped up airlines' efforts to stem industrywide losses that the ATA estimates may reach $13 billion this year. May said a new website generated more than 1 million e-mail messages to Congress in the last three days.
Senator Joseph Lieberman, a Connecticut independent, yesterday proposed a bill designed to restrain prices. His measure would limit the amount of oil and commodity futures that could be held by institutional investors such as pension funds. These investors trade commodities as financial instruments and almost never take delivery of the food or energy products.
Airlines began sending letters promoting the website, Stop Oil Speculation Now!, to members of their frequent-flier programs this week. The letters were signed by 12 chief executives from carriers including American Airlines.
The biggest US carriers are cutting seating capacity more than 10 percent each, parking 430 aircraft, and slashing about 20,000 jobs amid the past year's 97 percent surge in jet fuel.
The "normal" oil price should be around $65 to $75 a barrel, and the speculative premium may be $20 to $60 more than that, May said.
About 88 percent of airlines' current fares go just to cover fuel costs, taxes, and fees, May said. "We cannot continue to operate unprofitable flights."
