Just glanced at the JetBlue site to check on airfare from Boston to San Francisco. The last time I booked was in March for my trip tomorrow. I paid around $350 round trip. Needless to say, I was shocked to see prices almost $300, for ONE WAY!
How did this happen? Yes oil prices are higher but there are two points I want to make about this.
1. airfare prices are higher now than they were when a the price of a barrel of oil hit $147 in 2008 (prices are around $100/barrel).
2. I want to reiterate the effect of the falling value of the US dollar on the price of oil/gas to people who use dollars to buy things (as opposed to another currency. in other words, Americans:).
I discussed this in a post a couple of years ago (Why the Dow Could Hit 20,000 and You’d Still Be Broke) when I showed how the price of oil began a stupendous rise right after Federal Reserve Chairman Ben Bernanke began to lower interest rates (causing the dollar to fall).
The one thing I don’t want you to do is listen to the dingleberry politicians with their ridiculous conspiracy theories about evil speculators causing oil price spikes. 55% of these guys are trained as lawyers and likely not very versed in supply and demand. Exercise caution when listening to them ok?