Air tickets to cost more as a result of increase in jet fuel price  

Crude oil is costlier so are petrol, diesel and LPG. Jet fuels fall in the diesel group- it is called refined diesel or Aviation Turbine fuel. Read below an article on effect of oil price hike on air travel.

Airfares set to rise again as jet fuel prices go up
By Lalatendu Mishra, Hindustan Times, New Delhi, August 01, 2008

Air Travel may get costlier, as oil marketing companies on Thursday increased Aviation Turbine Fuel (ATF) prices by 3 per cent even though crude oil prices softened by over 15 per cent in the past fortnight. This puts an additional burden of a little over 3 per cent on airlines, as fuel accounts for more than 50 per cent of the operating cost of airlines.

On July 11, oil touched its all time high of $147 a barrel and it has now come down to $123 a barrel. Airlines have not pressed the panic button and raised fuel surcharge yet, but a 10 to 15 per cent hike in basic airfare seems imminent. "It may not happen immediately, but fares must be go up by more than 10 per cent to enable us arrest the losses," said a senior official of a private airline who asked not to be named.

"We will have wait and watch (before increasing fare)," Jitendra Bhargava, executive director, Air India told Hindustan Times. Parthasarathi Basu, chief financial officer, SpiceJet concurred that his airline too would be reviewing the situation. Airline bosses fear that any further hike would be a knockout blow for the industry, which is already reeling. "Loads have gone down, a price hike would be suicidal now," said an airline executive.

The tendency of airlines to operate more than needed flights on a particular sector is cited as another reason, which forces airlines to sell tickets at discounts while incurring losses. "In July the typical total fare between Mumbai and Delhi was Rs 5,200 even as the break even cost to the airline was Rs 6,600," says Dinesh A Keskar, senior vice president (Sales), Boeing. "Similarly, airlines sold Mumbai-Hyderabad tickets at Rs 3,100, while the break-even fare was Rs 4,500."

All this means that unless oil prices come down further, airlines will be forced to hike fares to stay afloat. However, analysts feel that the decline in global oil prices could reflect in the ATF pricing next month.

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solar eclipse in India today  

Photo Credit eiriknewth

Here is the report taken from ddnews, India

Rare partial solar eclipse in India today

A rare total solar eclipse will occur on Friday afternoon when the moon will pass directly between the earth and the sun but it will be visible as a partial eclipse in India.

The eclipse will begin in Arctic Canada and sweep across Greenland, western Siberia, Mongolia and central China.

In India, the visual treat will start at 4:03 pm in Delhi and last for about two hours with maximum impact at 5:02 pm.

In rest of the country, the partial eclipse will be visible a few minutes later.

Nearly 15 lakh pilgrims are expected to take a holy dip in Brahm Sarovar at Kurekshetra where security has been tightened due to recent serial blasts in Bangalore and Ahmedabad.

Viewers all across the globe can see the eclipse as it happens on NASA TV and by logging on to

The US space agency has made arrangements to telecast live images of the rare celestial event.

"The partial eclipse will be seen in the north-eastern region, starting from about 4 pm," said Rathnasree, Director at the Nehru Planetarium.

The maximum obscuration of the sun will occur at Sibsagar

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Crude price and gold  

Photo Credit d70focus

Have you ever thought of any relationship between crude price and gold?

As for me, I have never thought of any such thing.

When the prices of petrol was rising many people offered theories why it is rising. A conservative blogger in USA even suggested that the reason is that India and China are giving subsidy to petrol, people getting it cheap and they dont value it as it is cheap. So there is more consumption and also more waste and hence there is this price rise of petrol in USA.

What a reason!

Even after subsidy we pay in India much more for a itre of petrol than what people pay in USA. I mean in terms of money. A litre of petrol in India costs Rs55/- which is around 1.31$. In USA you can buy lot more with this money than we can buy in India.

OK, let us forget about this now.

Why? The crude price is falling. And when it is falling people are finding reasons why it is falling.

Here is a reason published in an Indian newspaper. Surprisingly it links crude price with petrol.
Read below:

Ounce vs Barrel: Golden glow makes global crude oil prices slip
Economic Times, New Delhi, July 31, 2008

The fall in crude oil prices over the last couple of weeks has been attributed to changes in demand-supply conditions, but there is much more to this slide.

The reasoning that oil has risen far too much compared to gold a powerful relationship measured by gold-oil ratio (GOR-has been a trigger for the sell-off in oil contracts by investors, mainly global hedge funds, on overseas exchanges, a person familiar with the development said.

In addition to selling oil contracts, these investors have created long positions in gold, as the ratio indicates that the yellow metal is relatively inexpensive vis-a-vis the black gold. Accordingly, most analysts feel gold may outperform oil in the near-term, as the yellow metal is seen as a hedge against higher inflation, which has been mainly driven by oil prices.

"It (GOR) normally represents a good tool for investors to establish the relative of commodities. It clearly implies buy gold and sell oil," said Nomura International's Asia-Pacific strategist, Sean Darby.

Earlier this calendar year, the GOR, which is calculated by dividing gold price per ounce to oil price per barrel, was in the range of 9 to 11:1, but the ratio has slid to 6-8:1 of late.

The ratio rose to 7.5:1 on Tuesday, from 6.3:1 mid-June. Historically, many investors have seen buying opportunities in gold when the GOR is below 10 barrels/ounce. "Oil is now more expensive than it has ever been, some 30% above the previous peak in real terms," said Credit Suisse, in a recent global strategy report.

So far in 2008, crude oil on the Nymex has risen roughly 30%, even after coming off record levels, while gold has gained roughly 11% in the same period. Analysts, however, add that the GOR is not the only reason for the recent fall in oil prices of late. The likelihood of slackening of demand for oil from its largest consumers, including the US, China and India, due to economic slowdown, is believed to have investors reversing their long positions in oil contracts.

"Our own intuition is that we will reach peak oil demand (the point at which no further growth in supply will be necessary) long before we reach peak oil supply (the point at which no further increase in annual supply will be technically feasible)," Credit Suisse added.

Analysts said another reason for the fall in oil prices is the strength in the US dollar in the last couple of weeks. The dollar has an inverse relationship with oil, which means that oil weakens when the dollar rises.

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