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Originally Posted by Matt13C  I believe we are at the point where cut backs are unavoidable. The cost of non-aviation fuel has increased 30% in the last few months and is expected to increase more. With that the price of food and other essentials has risen to accommodate their increased costs. With that happening people who fly as a luxury will begin to cut back. Those who fly for business will begin to explore other means, namely teleconferencing or videoconferencing to conduct business.
If the government mandated an across the board increase in prices it would do very little, if not hurt, the aviation industry. It would further decrease the size of the market of potential passengers, while not reducing costs. This would require companies to make further cut backs.
No, what the government needs to do is stop cutting the prime rate. Every time they do that the dollar loses more of its value. Investors then, afraid of inflation, invest in commodities, oil, gold and natural gas. This increases their demand and send the prices higher. Due to the higher prices of fuel other products need to increase their prices to cover costs and the cycle continues.
The government is essentially the root cause of inflation, the very thing they claim to be trying to avoid. |
Last I checked when cost increases demand decreases while supply increases. Just because people invest their money in a market doesn't mean more people need the same commodity. If you invest in oil, you will invest in the oil companies, not buy barrels of crude oil like if you were to invest in gold.
The unfortunate thing is that with these rising prices in oil, people still go to the gas pump because of the car being more of a necessity these days than a luxury.