US airlines seek balanced energy policy

The Air Transport Association of America has echoed the call of the Consumer Energy Alliance to secure a balanced and comprehensive U.S. energy policy that increases U.S. energy independence and results in a more stable energy supply and predictable costs.

“Airline customers have a direct stake in U.S. energy policy, as energy supply and prices have a profound impact, like never before, on the level and cost of air service that can be provided,” said ATA President and CEO James C. May. “Unless serious bipartisan attention is focused on this problem, the consequences on our nation’s air transportation system will be long lasting.”

        Yesterday, crude oil and jet fuel prices once again shattered existing records. Crude oil spot prices settled at an all-time high of $133 per barrel, double its price of $66 per barrel on May 21, 2007. Of greater concern to airline customers and employees is the $173-per-barrel cost of jet fuel, $40 more than the price of crude and $83 more than a year ago.

 

        Nearly 30 cities across the country have completely lost scheduled air service in the past year, with more service cuts and job losses inevitable as airlines attempt to cope with soaring fuel prices. Eight U.S. airlines have shut down operations since the end of 2007 and another has filed for bankruptcy protection. More than 9,000 U.S. airline employees have lost their jobs so far this year, with additional cuts being announced as the year continues.

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        U.S. airlines are projected to spend nearly $60 billion on fuel, $18 billion more in 2008 than in 2007 - an increase equivalent to employing 244,000 airline workers or purchasing 261 narrow-body jets. The portion of an airline ticket needed to pay for fuel has risen from 15 percent in 2000 to 40 percent in 2008.

 

        In remarks made today during Capitol Hill Energy Day, May emphasized the need for a federal energy policy that addresses both energy supply and demand in the short and long terms. “We must balance the use of traditional sources with development of alternatives and conservation measures, and encourage environmentally responsible production of all domestic energy resources,” May said. He added that the government must recognize the economic relationship between physical and nonphysical (commodities) markets and appreciate that transportation customers rely on a stable, affordable fuel supply.

 

ATA energy priorities include the following:

 

-    Make barrels available from the Strategic Petroleum Reserve and the Northeast Home Heating Oil Reserve in the event of supply disruptions or price spikes; invest proceeds in energy infrastructure

-    Curtail commodity index speculation and close regulatory loopholes in trading of commodity futures (e.g., crude oil, heating oil); create equal playing field across exchanges and increase transparency of activity

-    Pressure U.S. refiners to increase utilization, which has fallen to abnormally low levels

-    Streamline NEPA/permitting requirements to allow expedited siting of new and improved refining capacity to meet surging demand for middle distillates (e.g., diesel, heating oil, jet fuel)

-    Facilitate environmentally responsible crude oil exploration, refinery production, nuclear energy investment, wind power or other sources of energy through changes in tax policy, regulation or fiscal incentives

-    Increase R&D for alternative aviation fuels and for carbon capture and sequestration technologies


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