‘Fundamentals Don’t Support’ Current Oil Prices

 - June 12, 2008, 12:28 PM

“The fundamentals don’t support the price of oil,” Hiller Group national sales manager Wesley Earl told attendees of the Florida Aviation Trade Association annual meeting on Tuesday. Tampa, Fla.-based Hiller Group is a fuel distributor that provides Chevron and Texaco branded fuel to more than 350 FBOs. Factors inflating fuel prices include the dwindling number of refineries (especially for jet-A), geopolitical issues, lack of a U.S. energy policy and the low value of the U.S. dollar, but Earl said commodities speculators are behind what he contends is an “oil bubble” as the price per barrel hovers just below $140. He maintains the current pricing levels aren’t sustainable and “should really be in the $60- to $80-per-barrel range.” As fuel prices climbed this year, fuel sales at FBOs have fallen between 10 percent and 20 percent year-over-year. Separately, a well known Central Florida FBO told AIN that its fuel sales are down 15 percent over last year. Meanwhile, OPEC secretary general Abdullah al-Badri this week called for measures to curb market speculation, which OPEC contends is sending oil prices to “unjustified levels.”