DRIVING OIL PRICES NOT ONLY
GIVING CONSUMERS AT THE GAS
PUMP.
ONE AIRLINE SAYS TICKET PRICES
ARE SET TO GO UP DUE TO HIGHER
FUEL COSTS.
THE PRICE OF CRUDE OIL IS 40%
HIGHER THAN IT WAS ONE YEAR AGO.
JOINING ME NOW, PRICE FUTURES
GROUP ANALYST FOX BUSINESS
CONTRIBUTOR PHIL FLYNN ALWAYS
FIRED UP BRIGHT AND EARLY.
THE WARNING COMES FROM AMERICAN
AIRLINES DOUG PARKER.
WHAT YOU THINK OF THIS AND WILL
IT BE THE FIRST OF MANY?
>> I THINK IT MAY BE.
A LOT OF THESE AIRLINES VERSE
FOUR BUS TOUR, MAKING RECORD
PROFITS.
$38 BILLION IN PROFITS AND THEY
DIDN'T THINK OIL PRICES MIGHT
NOT EVER GO WELL.
ALL OF THE OIL PRICES HAVE GONE.
A LOT OF THE NOT PREPARED FOR
THIS BECAUSE THEY BELIEVED IN
THIS LOWER FOR LONGER MANTRA AND
THEY WERE ATTACHED CORRECTLY.
I DON'T THINK THE PRICES WILL GO
UP RIGHT AWAY, BUT THIS WAS A
STRONG SIGNAL IF OIL PRICES STAY
WHERE THEY ARE AND THEY PROBABLY
WILL, MORE THAN LIKELY WE'LL SEE
THOSE PRICES FOR TICKETS GO OUT.
>> PHIL, KEVIN KELLY HERE.
OPEC IS ACTUALLY TRYING TO
FIGURE OUT THE WHOLE PRODUCTION
CONUNDRUM.
YOU THINK THEY WILL OPEN UP
THEIR SPIGOT AND BRING MORE
OUTPUT ONTO THE MARKET AND
ACTUALLY HELP STABILIZE OIL
PRICES AND PUT A CAP ON THE
RUN-UP WE'VE SEEN RECENTLY?
>> KEVIN, GREAT QUESTION.
LAST WEEK WE HEAR FROM SAUDI
ARABIA AND RUSSIA BASICALLY
SIGNALING TO THE MARKET THEY
WERE READY TO RAISE PRODUCTION
MAY BE BY 1 MILLION BARRELS OF
OIL A DAY.
AS SOON AS THEY SAID THAT, THE
PRICE OF OIL DROPPED 8% IN A
COUPLE OF DAYS.
I THINK IT SCARED THE CARTEL OUT
OF THEM TO BE HONEST WITH YOU.
I THINK THEY MIGHT HAVE SECOND
THOUGHTS BECAUSE TODAY, THE
WEEKEND BASICALLY SAID THEY
MIGHT RAISE PRODUCTION BUT THEY
WERE VERY SOLID ABOUT THAT.
THEY WILL BE VERY PRICE
SENSITIVE BEFORE THEY MAKE THE
FINAL DECISION.
>> THEY ARE NOT NECESSARILY
GOING TO HAVE HIGHER PRICES.
THAT DOESN'T NECESSARILY MEAN
HIGHER FARES.
I'VE BEEN READING ABOUT PEOPLE
SAYING THEY ARE GOING TO START
CHARGING FOR CARRY-ON BAGS AND
OTHER KINDS OF THINGS YOU DO
THINK IT MIGHT GOING TO FEES
RATHER THAN FARES?
>> I THINK IT IS.
THE LAST TIME THEY PUT ON
TICKETS THAT MAY BE A
POSSIBILITY.
OVERALL, WE SAW A REPORT FROM
THE INTERNATIONAL AIR TRANSPORT
ASSOCIATION THAT BASICALLY SAID
THAT THEIR PROFITS ARE GOING TO
BE DOWN BY 12% FROM THE RECORD
THAT THEY SET LAST YEAR.
THAT IS A HUGE DROP GOING INTO
DOLLARS.
BECAUSE OF THE COMPETITIVE
NATURE OF AIRLINES THEY WILL
KEEP THOSE TICKET PRICES DOWN.
BUT EVENTUALLY, IF PRICES STAY
HIGH, EVENTUALLY THEY WILL PASS
THE COST ON.
>> IN TERMS OF WHAT PEOPLE WILL
BE PAYING OUT THE PUMP THIS
SUMMER, ARE YOUR ESTIMATES
COMING DOWN RECENTLY WITH CRUDE
OIL?
>> I THINK THEY HAVE SLIGHTLY.
THE NATIONAL AVERAGE IS ABOUT
295.
WE DO EXPECT ANOTHER RUN-UP IN
PRICE BEFORE THE FOURTH OF JULY
WHICH IS DIFFICULT.
RIGHT NOW WE HAVEN'T HIT THE $3
A GALLON AREA.
THE GASOLINE PRICES COME AN ERA
OF LOW GASOLINE PRICES ARE OVER.
EVEN IF PRICES GO DOWN, THEY
WILL STAY WHERE THEY ARE RIGHT
NOW.
THERE IS A VERY STRONG GLOBAL
ECONOMY.
DEMAND IS STRONG.
THE OTHER THING I'M CONCERNED
ABOUT IS THE COST OF DIESEL.
THE TRUCKERS HAVE REALLY BEEN
FEELING THIS PRICE INCREASE.
GASOLINE PRICES ARE $2.95
PEER-TO-PEER TRACKER PAGE $3.21
A GALLON MAINLY BECAUSE THE
LIGHT OIL IN THE U.S. DOESN'T
PRODUCE A LOT OF DIESEL FUEL AND
THEY ARE TIGHTER THAN GASOLINE.
>> THE HIGHER FREIGHT COSTS
FILTERS THROUGH TO OTHER
BUSINESSES JUST AS ONE EXAMPLE.
AGAIN, THE RISING PRICES ARE
FILTERING THROUGH THE ECONOMY
AND WILL SHOW UP IN WAYS WE