from an investment board ...
" Case in point - Southwest airlines just raised the cost of a typical ticket from $120 to $440. Deflationists would argue that lack of demand will force the cost of the ticket back down. Not quite - either people pay the higher cost or the jet service in question simply ceases. SWA is not going to lower fares below cost.
It would take a massive worldwide economic slowdown to get the price of oil back down to where that airline ticket is $120. But who knows if there will even be that much demand for air travel by then. Until that happens, I have to assume continued inflation. After all, SWA airline tickets are priced in US dollars. "
I would argue that SWA being forced to massively increase the price of its plane tickets is part of a much larger 'iceberg'. Many companies have been able to avoid the full effects of rising oil and commodity prices because they had in place fixed price supply contracts and/or had previously purchased huge inventories at much lower prices. Now that those below market contracts are expiring and those huge inventories bought at low prices are being used up and must be replaced, these companies will have no choice but to significantly raise retail prices to cover their actuall current costs.



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