Skip to comments.Oil Surge May Cost Jet Makers Orders (A & B Face the ... Loss Of Up to a 1/3 of ... Bookings)
Posted on 06/24/2008 9:59:06 PM PDT by Paleo Conservative
As rising oil prices cause even the strongest airlines to struggle, Airbus and Boeing Co. face the possibility that as many as a third of their orders for new jets could be postponed or canceled.
Driven largely by demand from airlines outside the U.S., the rival manufacturing giants over the past three years have collected almost 7,000 orders for modern fuel-efficient jets. For now, both jet makers say they are sold out for much of the next three years and are continuing with plans to raise production rates to meet demand.
But the landscape is shifting as oil prices rattle the underlying economics of the airline industry. Some airlines, including JetBlue Airways Corp. and Delta Air Lines Inc., are already taking steps to defer deliveries or rid themselves of orders. Others are starting to repeat steps they took after the Sept. 11, 2001, terror attacks, such as permanently parking gas guzzlers and selling newer jets to leasing companies for cash before leasing them back on a monthly basis.
The combined value of the orders for Airbus and Boeing planes exceeds $500 billion at list prices, .................................
Officials at Boeing and Airbus, a unit of European Aeronautic Defence & Space Co., say orders for their jets are spread across a diverse group of carriers world-wide, insulating them from regional economic swings. But they acknowledge that they are in almost daily talks with airlines seeking to cancel or defer deliveries...................
Mr. Udvar-Hazy predicts that 25% to 30% of the two makers' order books -- roughly equivalent to the number of planes that were intended to accommodate airline growth rather than replace aging planes -- could be subject to what he called the "flake-out factor" if oil prices continue their unprecedented rise.
(Excerpt) Read more at online.wsj.com ...
Allowing oil drilling in U.S. offshore waters that are now closed to energy exploration would do little to lower gasoline prices paid by consumers
. . . whereas pie-in-the-sky, paper tiger plans to conserve our way out of the problem will do nothing to lower gasoline prices paid by consumers. In fact,
Price is the language in which free people request goods and services.
Any governmental "price control" is censorship, pure and simple.
Money is the credit the we-the-people give to individuals for supplying goods or services. Money is inherently scarce because the ability, and thus the willingness, to give real credit for performance is limited. I can only give you the money that I have or can borrow, and you cannot expect me to do that without making me want to. The government can, it is true, increase the dollar supply - but since that does not increase the supply of desired goods and services and in crease in the dollar supply does not increase the money supply - the credit represented by a single dollar simply becomes diluted. Which is called inflation (a phenomenon which does not even require government printing presses - inflation occurred in Europe when Spain imported large quantities of gold and silver from South America).
High price is not the problem. The problem is that the government has prevented the people (in the "persons" of the oil companies) from responding to the price of oil (i.e., the request from the rest of the people) by drilling for oil where the oil companies think oil may expeditiously be extracted.
High price is a symptom of the restriction of the response to the people's request of supply. The effect of restriction is exactly the same whether that restriction is done by the interference of the government or by the collusion of the oil companies - and if the government imposes a "windfall profits tax" to expropriate the exaggerated credit for supplying gasoline represented by the high price caused by the government's own restriction of supply, the government is exploiting the people in precisely as if it had seized the oil industry and made it a government monopoly. With the advantage, to the government, that it uses the oil companies as scapegoats to take the blame for the exploitation of the people actually perpetrated by the government.
Here's an excerpt from an excellent piece by Sowell.
They have fought against the building of hydroelectric dams or nuclear power plants to generate electricity without the use of oil. They love to talk about their own pet "alternative energy sources," without the slightest attention to what these would cost in terms of money, jobs, or our national standard of living.
Even when one of their pet "alternative energy sources" -- windmills -- is proposed to be built near them, suddenly it is not right to spoil their view.
Politicians have indulged these spoiled brats for generations.
Now, when the chickens come home to roost, they are screaming about high prices and Big Oil. That is world class chutzpa.
Liberal politicians have played this game for years. With the help of the liberal media, they have so demonized oil producers and so replaced economics with demagoguery that now Republicans are running scared, which seems to be their favorite exercise.
The entire excerpt should have been italicized.
Very well stated, cIc. Though I can't begin to put in words like you or the great Thomas Sowell does, I always enjoy reading you both. -- jazusamo
Me, mentioned in the same sentence and context with Thomas Sowell!
I'm framing that one! I am gonna post it on my homepage!
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