Airlines Slammed By Soaring Jet Fuel Prices

By Irina Slav

Jet fuel prices hit a 13-month high last week as oil prices rose, making airlines’ already difficult life even more difficult.

Despite still depressed demand for air transport, jet fuel follows the price curve of crude oil as costlier oil for refining results in costlier end products, including jet fuel.

Last week was a special case, however. The Arctic cold wave that bore down on parts of the U.S. unused to such low temperatures caused massive disruption in oil production and refining due to wellhead freezing and power outages that affected refinery operations.

With airlines already battered by the pandemic and the travel restrictions it led to, this is just one more challenge to deal with while they are still in a vulnerable state. According to analysts, passengers could start flying again as early as this spring as more people get vaccinated and the weather becomes warmer.

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However, there is no certainty as newly emerging variants of the coronavirus that caused the epidemic have medical experts warning of more waves of infections unless restrictions continue.

These restrictions have cost airlines billions. Just the four largest U.S. air carriers—Delta, United, American, and Southwest Airlines—lost more than $31 billion last year alone, the New York Times reported recently. According to estimates from Airlines doe America, the industry is still losing $150 million every day.

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Whole airlines received some $40 billion in federal grants to keep paying their employees and billions more in low-interest loans, the federal government could not foot their jet fuel bill. It will now just add to the conundrum of keeping airfares low enough to keep passengers coming but high enough to start recouping some of the losses incurred during the pandemic.

On the flip side, the jump in jet fuel prices may well be temporary, and prices could fall back down as refineries on the Texas Gulf Coast return to normal operation.

By Irina Slav for Oilprice.com

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