The coming oil crisis

After thinking over yesterday’s announcement that Southwest is changing it’s Rapid Rewards frequent-flyer program, I was reminded of Southwest’s savvy negotiating of its oil contracts. Its keen ability to manage its fuel costs helped Southwest remain profitable through our last recession while its rivals collapsed into bankruptcy.

I also thought of last week’s analysis saying the surging worldwide demand for oil, driven by China’s voracious energy appetite, would likely result in nearly doubled gasoline prices by 2012. This is after gasoline prices doubled over the past two years. This week the average price of a gallon of gasoline on the East Coast is $3.07, whereas the price two years ago was $1.65 (and yes, I am fully aware that these prices will one day seem hilariously low).
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