energy/fuel

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 market price of jet fuel are highly correlated with movements in the price of home heating oil.

Our online calculator shows that, annually, every dollar increase per barrel drives an additional $465M in fuel expenses for U.S. passenger and cargo airlines. Every penny increase per gallon drives $195M in fuel expenses.

Source: Energy Information Administration and ATA slide presentation

NYH=New York Harbor; USG=U.S. Gulf Coast; L.A.=Los Angeles, WTI=West Texas Intermediate (using cash/spot market)

*Through May 13, 2008; 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.

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 50 percent. At approximately 19.5 billion gallons per year, every penny paid for a gallon of jet fuel costs the U.S. passenger and cargo airline industry $195 million annually. (Note: One barrel contains 42 gallons.) Over the last several years,the price of jet fuel has significantly outpaced the price to fly a mile domestically, as illustrated in the table below and in our online slide presentation. From 2000 to the first half of 2007, the price of jet fuel more than doubled and the U.S. Consumer Price Index--the price of a representative basket of U.S. goods and services--rose 19.5 percent, whereas the price to fly a mile fell 10.2 percent.

*Excludes government-imposed taxes and fees