Gasoline prices in Iowa have been creeping down the past week or so, but Iowans who plan to fly someplace for Thanksgiving are -not- seeing a corresponding drop in airfares. Fuels analyst Sung Won Sohn says the petroleum price drops are aiding airlines, just not immediately. Sohn says “Hopefully this will help airlines but not immediately because many of the airlines lock their prices in the futures market. But, eventually the lower prices will help them.” Crude oil is about eight dollars-a-barrel cheaper than it was a couple weeks ago. While that’s especially good news for the transportation industry, Sohn says it doesn’t mean the airlines are “in the money.”He says “There are lots of other problems; the labor problems, the efficiency problems. So even though the low price of oil will help, it will be a turbulent industry for the time being.” Sohn says another problem for the airlines is that they lock in their prices ahead of time in a practice called hedging. So even if oil prices remain down, it will be awhile before many airlines realize the benefits.
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