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81 comments on A Tale of Profit and Loss - The Future of Air Travel – Part 2
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A few points:
The lack of any fuel taxation on air travel is exactly why 'The Airlines' are said to be the canary in the coal mine wrt. PO -as they are so highly leveraged to fuel costs and an incremental cost in the underlying wholesale aviation fuel price would have a much smaller effect. If they where heavily taxed and still in existance then they would have built a business model that works with higher fuel costs. Since their business model barely works in a cheap energy regime they will be absolutley hammered in the coming decade/PPO (Post Peak Oil).
Nick.
carbonsink,
Its great that you have one of the most efficient cars, and you travel with 3 passengers. How many cars on the major roads between cities will have no passengers and will use >10L/100km? Also fuel is just the beginning of the costs of driving, extra Kms depreciate car, require additional servicing( not cheap under warranty) wear out tires. Also on many trips will require over-night accommodation.
Good point about fuel tax, this is why we know that oil can go up to >$300 a barrel, Europeans have been paying this for years when you include taxes, and while $8-9 a gallon seems ridiculously expensive to US drivers they will adapt in time and the suburbs will not be abandoned. Wouldn't be surprised if most SUV's stay on the roads even if only used occasionally as the second car(insurance and depreciation still more than fuel for modest driving).
European prices are not comparable with oil at $300/barrel since most of the money is tax - so it is just redistributes in the same economy, and in a sense is not a 'real' cost to the overall economy.
Money paid out to the oil exporters is in a different league, and represents a real cost to the importer.
Put simply, it has to be paid for.
In a perfect world that would just mean that folk in oil importers had a lower standard of living, and produced more stuff for export to the oil exporters.
In practise great swathes of invested capital are made worthless, for instance the aircraft industry to take an obvious example, and the car fleet running at 20mpg to take another, so massive losses are incurred over and above the nominal price of the oil.