The price paid for jet fuel is a function of long-term contracts, spot market prices and point of sale, among other factors. Fluctuations in the price of jet fuel are highly correlated with movements in the price of heating oil.
Annually, every dollar increase per barrel (42 gallons) drives an additional $445M in fuel expenses for U.S. passenger and cargo airlines; every penny increase per gallon drives $187M in expenses.
Historically, fuel expenses have ranged from 10 percent to 15 percent of U.S. passenger airline operating costs, but are currently running between 30 percent and 40 percent.
| Dollars per Barrel |
| A |
B |
A + B |
Crude
Oil |
Jet Fuel
Crack Spread** |
Jet Fuel
Spot Price |
| CY 2007 |
72.34 |
18.58 |
90.93 |
| Jan. 1-Dec. 30, 2008* |
99.89 |
25.53 |
125.42 |
Source: Energy Information Administration and ATA analysis
*Updated by Thursday afternoon of each week; prices do not include costs of delivery and storage (e.g., pipeline tariffs, tank fees) or state/federal taxes, all of which can add add 10-20 cents per gallon.
**The simultaneous sale of crude oil against the sale of refined petroleum products. These spread differentials, which represent refining margins, are normally quoted in dollars per barrel by converting the product prices into dollars per barrel and subtracting the crude oil price.