At CEA, we spend a lot of time focusing on the real needs of real people and the ways they are impacted by domestic energy policy. This blog has frequently addressed the plight of American truckers and the nonstop economic strain they’ve faced in the wake of the oil price spike in 2008 and the ensuing recession that caused demand for their services to drop. Indeed, the trucking sector is a critical component – and one of the unsung heroes — of American commerce.
But this week, when a volcanic eruption in Iceland severely disrupted European and trans-Atlantic air travel, we got to thinking about the non-stop economic strain that the airline sector has faced.
Clearly, stories of Americans being unable to afford their European vacations will never play as well as stories of people struggling to cover the costs of their commutes to work. We sigh about pain at the pump but joke about the strategies — like selling pillows and tasteless food — that airlines resort to in order to make ends meet.
But the airline industry does a lot more than deliver tourists to the Eiffel Tour. It touches the entire economy. And, it has been struggling for as long as most of us can remember. This headline, Airline industry wonders why it even tries anymore quotes analysts saying that the disruption caused by the volcano – whose name we are not even going to bother spelling – is hurting the industry even more than the September 11, 2001 terror attacks.
BUT, it also stresses that airlines also have a chronic problem: “the inexorable headaches involved in varying fuel prices.” It’s the same problem that truckers have struggled under for so long: It’s very difficult to run a business when you cannot predict how much one of your key supplies is going to cost.
Like truckers, who have often complained that unpredictable prices are a bigger burden than high prices many airlines say volatile fuel prices are their biggest concern. The fact that airline executives such as Delta Air Lines President Ed Bastian are talking about oil price volatility now, when they have so many other concerns, speaks volumes about the burden of this oil price wild card.
Of course, airlines, truckers, workers with long commutes, and other transportation-focused types feel this pain the most. But it reaches much further. Most industries are to some degree, energy-intensive. And most industries are on uncertain ground today, still reeling from a severe economic downturn. They all stand to benefit from a strong domestic energy sector, where the supply and the prices are steady.