Oil and Airlines - One way to Profit...

Airlines have been especially hard hit by the spike in crude oil prices. This week they got to together and made some noise, targeting the oil speculators and the opaque commodity futures markets in general as a major contributor to the recent nearly vertical rise in crude and its distillates (such as gasoline, heating oil and jet fuel).

A consortium of 12 U.S. airlines sent a letter to Congress, correctly stating that oil speculators currently purchase 66% of all oil futures contracts, vs. 21% 20 years ago. The letter suggests this extra influence gives the speculators far more control over the end price of crude oil - and that airlines are picking up the bill.

Quoting the letter: "Speculators buy up large amounts of oil and then sell it to each other again and again," the airlines say in their letter. "A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab."
It's not hard to see why airlines and their shareholders are fuming! Here's how some of the majors have fared, in large part due to reducing profits from higher jet fuel prices...

Click here to find out how these stocks stack up against their February performance, and find how Jeff Manera recommends playing airlines less affected by oil.

by The Freshman |  07/11/08