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Posts with tag OilPrices

'Duh!' of the day: United loses $544 million betting on the fuel market

Filed under: Borrowing, Extracurriculars, Transportation, Travel, Recession, Bankruptcy


Hedging fuel costs sounds confusing, but it's nothing new. Some airlines, like the budget model Southwest, have managed to claim a profit in no small part because their masters were clever enough to buy most of its fuel when it was still sensibly priced. That can work out really well if gas prices go up, because those smart airlines will still be paying an older, lower price. Some experts think Southwest has saved $3.5 billion by doing this since the late '90s.

United Airlines, which has a management as sharp as a box of hammers and aging seating about as soft, thought it could imitate Southwest by getting into the hedging game, too. But, whoops! Timing is everything. It got in way too late, as the market prepared to peak. Prices went down. And right now it's paying almost $13 more a barrel than oil is actually worth, which could rack up as much as $544 million in boneheaded, unnecessary losses.

It's a lot like the guy down the street who bought his house a year ago for $400,000, only to find in this self-correcting market that it's now worth about $250,000, which everyone in the neighborhood knew was a more realistic price all along. He intended to flip it, but now he's got to live in it. Of course, if gas prices go back up a bit, United's loss may be mitigated slightly.

Gas prices adding up everywhere: Pizza, lawn mowing, where else?

Filed under: Shopping, Transportation, Recession

I hadn't called my favorite pizza place in a while because I've been making my own (it's cheaper and I've been trying to eat mostly organic food). But I was going out for the night, leaving my husband alone with three boys, so I called Rudy's and ordered the best deal: the $9.99 medium pepperoni pizza.

"There's a $15 minimum now," said the voice on the other end, apologetically. "Gas is $4 a gallon, you know."

I wasn't the only one to be hit with expenses due to rising gas prices (and what's worse, my husband didn't eat the $5.99 antipasto salad I ordered). Many businesses are starting to charge for delivery, or tacking fuel surcharges on top of existing prices. The Washington Post points to a $10 increase in the cost of a mowed lawn for one woman; off-the-charts fuel surcharges at grocery delivery service Peapod; and the surcharges to ship packages at UPS and FedEx, going up by a percentage point to 9.5% on July 6 thanks to the ever-rising cost of diesel. Green Daily wrote about a fuel surcharge for traffic violations that will go into effect in one Georgia town July 1.

Naturally, not everyone is cool with the added on costs.

Flashback to the swinging seventies: Alaska's building a gas pipeline!

Filed under: Extracurriculars, Technology, Recession

As a student of history, I often wonder what it would be like to live in another era. I imagine myself, fedora-clad, smoking my way through the 1930's or perhaps wearing something in a nice olive green and smoking my way through Europe in the early '40s. Alternately, I could even see myself in a slick sharkskin suit and thin tie, smoking in an office in the 1950's.

Looking at the last paragraph, I'm sensing a trend.

Anyway, I don't often imagine myself in the 1970's, as I've already been through that decade once. Granted, my seventies experience didn't really involve any of the big themes of the era, like women's lib, stadium rock, and drug abuse. For me, it was a time of child-sized leisure suits, earth-tones, and the Six Million Dollar Man.