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Pricey Oil Will Take Airlines Down


"A wing, a lot of loans, and a prayer" (Finance, June 13) is a good overview of the structure, complexities, and risks of the U.S. Airways (UAIRQ)-America West (AWA) deal, but there's one enormous sword hanging over the airline industry that wasn't mentioned: fuel costs. Recently the head of the International Air Transport Assn. said that based on $47 per barrel oil, the industry will lose $6 billion this year. Almost no one is predicting any reduction in oil prices within the next two years, and there's a quickly growing consensus that we may have already entered the era of permanently expensive oil. (Yes, I'm referring to the Hubbert's curve of peak oil production that is just starting to get widespread attention.)

I think it's clear that, barring any stunning technological advancement, we're seeing the beginning of not just a downsizing and realignment of the airline sector but its complete transformation into a much-higher-priced, lower-volume boutique industry. For the sake of those who are employed in that industry, I hope I'm wrong.

Lou Grinzo

Greece, N.Y.

Re "The cost of all those McMansions" (News, Analysis & Commentary, June 6): The U.S. needs to create more jobs for the millions of low-skilled Americans who will not be acquiring the higher educations necessary to become globally competitive in high-tech industries. The U.S. also needs more jobs that cannot be outsourced to foreign countries. The construction industry provides both of these types of jobs, and there is lots of work to do. Besides the steady demand for new homes that is forecast for the next 20 years, America's existing buildings need to be upgraded to reduce their consumption of energy.

Lyn Bowman

Athens, Ohio

Re "Imported energy: How the U.S. can be smarter" (Economic Viewpoint, May 16): Jeffrey E. Garten covers the difficulty of trying to "regulate" foreign sources of natural gas through diplomatic means. Fundamental sources of energy must be within one's own borders. The only source that can meet demand and U.S environmental objectives is nuclear power. The U.S. owns thousands of tons of depleted uranium (U-238). The French are successfully using breeder reactors for their entire electrical system (with the exception of their existing hydro plants), and they have the cheapest power in Europe. Most galling is that the technology they used was originated in Idaho and was abruptly terminated by President Bill Clinton, who stated before Congress that nuclear power was no longer needed.

James A. Sartori

Williamsville, N.Y.


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