Archives: 2008 May

In what is shaping up to be a disastrous year for airlines the UK airline Silverjet cancels all flights, probably for good. Silverjet offered deluxe business class service from London’s Luton Airport to Newark airport in New Jersey and to Dubai, United Arab Emirates.

A Silverjet press release stated that an expected round of $25,000,000 in financing had fallen through and that without the funds the airline was unable to continue operations. Silverjet is still hopeful that it will secure funding but in the current business environment for airlines, which in an age of high energy costs is probably permanently altered, I wouldn’t count on Silverjet’s efforts being successful.

With crude oil holding above $125 a barrel all airlines are suffering from high jet fuel costs. The only airlines that are still expanding services and adding to fleets seem to be the Asian and Mid Eastern airlines that are operating in high growth rate economies. It should be noted that a number of these airlines are state owned or state supported and that fuel costs are subsidised by their governments.

For the western airline carriers, especially the American airlines, future prospects for profitable operations are not good. With crude oil already above $125 a barrel and the Atlantic hurricane season starting on June 1st, any disruption to oil supplies from the Gulf of Mexico would sent oil, gasoline, and jet fuel prices to even more crazy levels.

The airlines will have to make severe adjustments in the way they operate in a high cost of energy world. The days of serving a mass market of ordinary income people is probably on its way out. In the not so distant future the airline industry will likely severely cut back on flights, especially to smaller market areas.

Fleets will be curtailed leaving the industry with sharper lower carrying capacity that will serve only those who have the means to pay premium prices for tickets that are priced to fully reflect fuel costs and that leave the airlines with a profit. An average income person would be reduced to flying mostly in only emergency situations or if his company was paying for the ticket.

America has been driving to disaster ever since its economy was structured around the automobile and cheap energy supplies.

In an age of cheap energy supplies the forth coming disaster was well hidden. In fact, America prospered as its love of the automobile created well paid factory jobs and opened up the rapid development of tracts of land far from city centers. The low density American development pattern, as wasteful as it is in the consumption of energy resources, was born.

Now that energy is no longer cheap disaster is imminent. Like the airlines, the American business and lifestyle model is broken with oil above $125 a barrel and probably headed higher, perhaps much higher, as peak oil all too soon kicks in with a vengeance.

Gasoline prices at $4.00 a gallon have begin to force Americans to cut back on their driving. Even middle class families are having a tough time making ends meet with rising gas prices, rising food prices, double digit increases in the cost of health care, stagnant incomes, and falling house prices occurring all at the same time. So some effort at energy conservation is finally underway.

Unfortunately, America and Americans have not yet come to grips with the fact that massive changes in the way that the typical American lives are going to be forced upon them. There isn’t one politician in sight who has the guts to tell Americans that many of them face a long term reduction in their standard of living.

Driving a few less miles each week may help some but it isn’t going to make a dent in the hard reality that the privileged position of The United States of America in the world is in a state of transition. Things will never be quite the same as Americans will be forced by economic events to adjust the wasteful lifestyle that they have come to know as the “American Way of Life”.

Warning. The following video from Reuters has several disturbing brief graphic segments about the war in Iraq.

Reuters, as you probably know, is one of the premier news reporting organizations in the world. While it made its reputation by reporting financial news Reuters does a fine job, largely through it’s worldwide network of local correspondents, of covering breaking news and news of importance, like the war in Iraq.

Americans have paid a high price for the war in men and women killed or wounded, about 4,100 killed and over 30,000 wounded over five years, as well as many thousands of mentally disturbed warriors returning to the States from Iraq combat. Now a shaky economy made worse by the misguided effort in Iraq is beginning to cause more misery at home.

The war is helping to push up the cost of oil and by costing the US about 12 billion dollars a month is contributing to the sad state of America’s finances.

However, the price that America has paid for its misadventure in Iraq pales in comparison when compared to the price that has been and is being paid by Iraq and Iraqi’s. Some 4.7 million Iraqis have been displaced by the war, over 2,700,000 have left the country as refugees, and while estimates vary considerably up to 1,000,000 Iraqis out of a population of only 27,000,000 have been killed.

This film by Reuters called “Bearing Witness in Iraq” shows up close and very personal the horror that George Bush and his government have brought to the people of Iraq.