Fuel prices affect everything

Japan Airlines Flight 73 from Honolulu to Tokyo Thursday will fly right into the history books - as the last commercial flight on JAL of a Boeing 747, the classic jumbo jet with the stretched upper deck. Like the Northwest side of Delta Air Lines and several other airlines, JAL is retiring its 747s because jet fuel has become too expensive not replace older jets with newer models that are less thirsty. Young Brothers, which not long ago won the right to assess fuel surcharges, has nonetheless sought and won substantial rate increases (though not as substantial as requested) kicking in this weekend. This is indirectly tied to fuel bills, too. YB might have saved on its fuel bill by doing fewer sailings in this recession (traffic is down about a fifth from two years ago) but its customers don't have the storage space, so it has continued to do the same number of sailings. It means less revenue on each barge, something the fuel surcharge does not cover. But the weirdest development in the arena of fuel costs is that rising oil prices have caused an oil company to post a deficit. Tesoro Corp., owner of one of Hawaii's two refineries (Chevron owns the other one), lost $45 million in the second quarter because its refinery profit margins were squeezed. Unlike the real huge oil companies like Exxon and Shell, Tesoro has no oil wells. It buys crude from others, and pays more when the price of crude soars. But something else that happens when the price of crude soars is that, once the increase has been passed through to the retail end, consumption falls. So Tesoro pays more for crude, then sells less gasoline and jet fuel. In the second quarter its Kapolei refinery production was down 7%.

Comments

[Stan]

Howard.

Just to be specific, the aircraft that is being retired is a Boeing 747-300. It was an intermediate model built in the early 80's for airlines who were looking for an updated B747 model. Less than 100 of the model were made, and was replaced quite immediately in 1988 with the -400 model, which is currently a model JAL has a lot of in their fleet.

[j. k.]

It is a scary how the gas prices fluctuates and how it's impacting our daily lives. When I first purchased my V6 truck, it cost me around $37 a week to fill up where as now days I'm lucky to be around $50. Just this past September I was paid up to $70 to fill my truck. Unbelievable. What I don't understand, entirely, is where is Hawaii getting their oil from? Don't we have oil wells around the Pacific? I know there's a whole conspiracy theory in regards to the nation's oil, but I'm not inquiring about that - it'll get too chaotic to discuss - but I often wonder whether we're getting it barged from the Pacific or the Atlantic, or even the Gulf. The oil game is just to hard to follow and alternatives are a bit costly and can't be implicated at the drop of a dime. Like here on Kaua'i, some residents are getting antsy on why we're not installing windmills like Maui. The head guy at KIUC wrote a well-thought out response and pointed out that Kaua'i is home to the endangered Shearwater bird-which, if you remember, is why Hawaii switched to digital signals a month before the rest of the nation. Our state and county leaders have a very difficult road to travel in terms of oil and alternative energy.