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UK businesses brace for jet fuel rationing
- baggy_trough 6mo agoWhy ration rather than raising the price to whatever balances supply and demand?
- malfist 6mo agoDoesn't matter what the price is if there isn't enough for sale
- epistasis 6mo agoUnless there's a single buyer, or at least a coordinated decision of "above this price, we all buy nothing, and below this price we all buy our normal amounts", it truly does matter what the price is when there's not enough for sale. The price is determined by who needs it the most and is willing to give up the most cash. Instead of rationing by lines, or fixed quantities, it's allocation to those who can either make the most out of the jet fuel, or those for whom money is the least valuable.
- redox99 6mo agoThat's not how supply and demand works.
- malfist 6mo agoThats exactly how supply works. Unless you're saying I can still buy fresh wooly mammoth meat somewhere if I just offer enough money
- redox99 6mo agoMammoth meat does not exist. Fuel does exist.
- malfist 5mo agoAnd when your supply of jet fuel is cut off? If you don't ration and let the free market decide how to allocate it, how long do you think it lasts until you say "jet fuel doesn't exist"?
- baggy_trough 5mo agoA very long time, certainly much longer than rationing! That's the whole point of raising the price.
- ben_w 5mo agoThe scenario being faced is not a complete cession of the existence of jet fuel, it is a supply shortage. There is a split based on pre-existing contractual obligations: absent such obligations, who offers the most money, gets the fuel; But those who have pre-existing contractual obligations they find cannot be met, they default on those obligations. Rationing can be useful when a government decides the market is allocating contrary to the national best interest, for whatever reason. As with market pricing, it's not going to magic new resources out of nowhere.
- ktallett 6mo agoThey have the data already of the max price customers will pay
- Beijinger 6mo agoWhy the downvote? You can fly to the EU for 600 USD (retour), more in high season. Non business people are willing to spend 1200, 1400 USD. I assume around 2000 USD the demand will fall off significantly. At 5000 USD for economy it will be close to zero.
- ghaff 6mo agoI just booked for the fall to London. Roundtrip was around $1200 from eastern US in economy with a couple of minor upgrades which is high but not ridiculous. The increment is basically a couple nights of hotels and meals. I've paid more; I've paid less. Was going to take ship back but it wasn't available for one person.
- 1970-01-01 6mo agoMassive price jumps in fuel enables panic buying. Fuel prices will be driven by both fear and scarcity, and prices go even higher.
- bawolff 6mo agoJet fuel isn't exactly a consumer good. Storing large quantities of it isn't exactly easy. It doesn't strike me as a good that is likely to panic bought.
- OgsyedIE 6mo agoThe UK does already have salt cavern storage for crude and natural gas, so it would be possible to make sites for kerosene if not for the present shortage.
- 1970-01-01 6mo agoRight - more of a danger of bullwhip effect than a consumer panic purchase. Still it is best to ease the spikes for everyone with rationing.
- jltsiren 6mo agoThat might work if airlines bought most of their fuel in the spot market. But major airlines tend to hedge their fuel prices, buying fuel that doesn't exist yet for a guaranteed price. If the shortage is severe enough, that fuel might not be delivered, leading to worse disruption than high prices alone would have caused.
- unethical_ban 6mo agoPerhaps because oil is not a luxury good, but an absolute requirement for a functioning economy. I imagine the consequences of literally running out of jet fuel would cripple cargo transport, among other things.
- baggy_trough 6mo agoThen the price will go up a lot.
- bugbuddy 6mo ago[flagged]
- OgsyedIE 6mo agoThey'd set up systems to take the economic dependence on the activity of humans down to zero. No human contributions to GDP, no need to care about where they are able to move to.
- robocat 6mo agoOnly if you completely ignore what drives people.
- throw1234567891 6mo agoBender would have said “kill all humans”.
- Bender 6mo agoYup [1] [1] - https://www.youtube.com/watch?v=gUjXhsaX06Y https://www.youtube.com/watch?v=gUjXhsaX06Y [video][17 seconds]
- kibwen 6mo agoIt pains me to even bother taking this comment with anything in the vicinity of seriousness, but surely you understand that the problems with human civilization are in spite of, and not for lack of, the existence of intelligent people. Intelligence is not the bottleneck.
- bugbuddy 6mo ago[flagged]
- CamperBob2 6mo ago1) Invent time machine 2) Use it to elect somebody else POTUS. Anybody else.
- aaron695 6mo ago[dead]
- torben-friis 6mo agoThis probably has direct implications for Mediterranean countries as well. UK tourists are a significant money source.
- somewhereoutth 6mo agoRight, however over-tourism is a real problem. Tourism provides low quality, transitory jobs, with income flowing more to wealth holders (property owners etc) than to wealth creators. It distorts property markets and sucks the oxygen out of other kinds of business. About time the Med weaned itself off of it.
- bawolff 6mo agoRelative to what? Its certainly better than resource extraction (oil).
- anamexis 6mo agoThe obvious question is, what jobs will replace them?
- mystraline 6mo ago[flagged]
- jzb 6mo agoThis doesn’t sound like they’ll be weaning off it, though: it’ll be cold turkey. That’s going to let wealth holders pick up more property at depressed prices and drive down wages.
- cucumber3732842 6mo ago>Tourism provides low quality, transitory jobs, with income flowing more to wealth holders (property owners etc) than to wealth creators No. It's worse than that. The transient customer base rewards the worst people. The people who make the most money and have the most influence are basically scammers who manage to stay one season ahead of the bad reviews. They're screwing customers, shafting suppliers, employees, business partners, etc, everybody. By the time the 1-star reviews are pouring in they've pivoted, sold the businesses, under new management, etc, etc, and are on to the next venture. So over time these people get rich you basically wind up with these sorts of people running everything including the government and it's all just shit. And it permeates everything. Everyone starts screwing everyone and being scummy by default. And the time and money and effort of having to hedge against in literally everything makes everyone all substantially poorer Source: Grew up in it. First world white people too, so spare me some patronizing BS about low trust societies or whatever
- preommr 6mo agoThe popular answer I've seen over the past few weeks is to just blame everything on the US, but that kind of thinking and lack of agency is exactly why countries like the UK are in the position they are. Just constant burying heads in the sand, and believing in models where the prior assumptions are from a bygone era.
- ceejayoz 6mo agoWhy would one not blame the US for this situation?
- credit_guy 6mo agoI think the OP is saying that it's ok to blame, but it is not ok to just blame. It is preferable to also act in some sort.
- ceejayoz 6mo agoFor decades the world has very reasonably operated on the assumption that the world’s primary superpower wouldn’t be dumb enough to do this without a proper plan. Everyone except the Iranians and maybe the Israelis were flat-footed by this, and the things that can be done about it are largely on the years/decades scale.
- mrcsharp 6mo agoBecause a competent country/government should plan ahead for shortages of any vital resource it depends on.
- epistasis 6mo agoI think the best interpretation of the overall stock market valuation is as a barometer of the wealthy's feelings, i.e. expectations of future returns rather than true future returns... but doesn't it seem like feelings have completely unmoored from the baked-in damage to the global economy from the current shortage? Or has GDP growth become so decoupled from energy use that I'm wrong and stock market valuations are completely OK, even as airlines brace for fewer flights due to energy shocks?
- A_D_E_P_T 6mo agoThe stock market has stopped making sense since the 2008 financial meltdown. Many reasons for this. In part, ZIRP is to blame -- a ton of money flowed into stocks simply because they were the only way to tread water and get a return. In part, you can blame Bitcoin (which demonstrated at scale that you can have an "asset" with zero underlying value and net-negative social utility that still functions as an appreciating value token,) and the meme-stock. The stock market is basically detached from the industrial manufacturing/production economy -- and even to some extent the services/insurance economy -- and is now vibes/feels based.
- verteu 6mo agoYeah, stock valuations seem pretty high, eg: https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe , https://www.currentmarketvaluation.com/models/buffett-indicator.php https://www.currentmarketvaluation.com/models/buffett-indica... , https://www.multpl.com/s-p-500-earnings-yield https://www.multpl.com/s-p-500-earnings-yield
- redwood 6mo agoThanks the second chart is more concerning than the first. The first has a variety of potential distortions at play first of all portion of industrial activity that's done by public vs private companies shifts over time and second of all a lot of these companies do 40 to 50% of their business overseas. Whereas a historically low ratio of earnings to index value is a deeper concern to me
- bawolff 6mo agoI feel like the headline is a tad misleading. It makes it sound like rationing will start next week. Where as article actually says. > Fuel suppliers have indicated that May should remain manageable but have flagged “mid to late June as the potential start of disruptions” So there is about 2 months before things run out.
- whatever1 6mo agoBefore that flights will start being canceled, as prices will be prohibitively high.
- bostik 6mo agoAlready happening. UK airlines are desperately culling flights, and have been doing so for the past month. The pace of cancellations is also increasing, with the last week seeing cancellation waves that from the outside look quite paniccy.
- 3eb7988a1663 6mo agoYou need to start rationing before you run empty. Give yourself more runway.
- arjie 6mo agoThe oil market effects have been fascinating to see. I only vaguely paid attention to it in the past (back in the peak oil days) but it's interesting to see how the chain of things work. You can produce oil type A and it can be useless because you run refineries type B, but those type B refineries are more profitable to run because the byproducts are really valuable. So you sell oil A and buy oil B and everyone is happy but then one day you go and raise oil B prices and you end up selling cheap oil and buying expensive oil so even though you produce more than anyone else, you still suffer the consequences. In fact, you can process oil A through your things but then the fancy machinery you bought sits idle, and you raised the money to buy that on the assumption you could process oil B and get byproducts. That and the constraint on GPUs and datacenters and all has really brought home to me what a globalized economy we live in and how much our prosperity has depended on us being peacefully happy to trade with each other. One of my favourite books on the general subject of trade is A Splendid Exchange which gives a cool directionally-correct view of how valuable trade is. Funny to think that Pax Americana would be ended by America.
- penguin_booze 6mo agoIf another country were causing all this trouble for the rest of world, we know what would have happend. But this is the US we're talking about, so that's OK, I guess. Just like the US made china pay for Covid, US is going to compesate all of us for these "little invconveniences", right? Right? Modern slavery takes many forms.
- tim333 6mo agoI can't see rationing - there is a fairly open market in jet fuel and if supply is short the price will go up and and people will fly less. At the moment jet fuel futures prices for the summer are similar to now so people can hedge if they want. We haven't had fuel rationing in the UK since 1957 for the Suez crisis. I see you can still get a London - Athens single flight for £39 in August which doesn't scream airline panic.