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Insurance industry

Oil Price Hike Sparks Fuel Surcharge and Higher Gasoline Prices

Strategic Insights

— 1 min read

Motorists and air travelers are paying the price for oil producers' decision to limit oil supplies. As of January, gasoline prices in Wisconsin are among the highest ever recorded for the month, with some areas reporting prices in the high $1.30s. The price of benchmark U.S. crude oil has climbed above $29 a barrel, its highest level since the Gulf War and more than double its price from about a year ago. In response to the higher fuel costs, three of the nation's largest air carriers - Continental, United, and American Airlines - have added a $20-per-round-trip fuel surcharge on travel beginning February 1.

Key Takeaways:

  • Gasoline prices in Wisconsin are among the highest ever recorded for January, with some areas reporting prices in the high $1.30s.
  • The price of benchmark U.S. crude oil has climbed above $29 a barrel, its highest level since the Gulf War and more than double its price from about a year ago.
  • Continental, United, and American Airlines have added a $20-per-round-trip fuel surcharge on travel beginning February 1, while Delta, Northwest, TWA, and US Airways have not announced a surcharge.
  • The fuel surcharge applies evenly to all domestic flights, regardless of length, and does not apply to international flights.
  • Continental's jet fuel costs in the fourth quarter were $259 million, 50 percent higher than in the same period in 1998.
  • The fuel surcharge will be included in advertised fares and appear on the face of the ticket.

Statistics:

  • Average price for self-service regular unleaded gasoline in Wisconsin was $1.309 per gallon, 3.2 cents less than in December (AAA).
  • Some Madison self-service stations were charging $1.399 on Wednesday, up as much as 6 cents per gallon from Tuesday's prices.
  • Continental's jet fuel costs in the fourth quarter were $259 million, 50 percent higher than in the same period in 1998.
  • The price of benchmark U.S. crude oil has climbed above $29 a barrel, its highest level since the Gulf War and more than double its price from about a year ago.

Sources:

  • "Motorists and air travelers are starting to pay the price" (Associated Press)
  • American Automobile Association
  • Continental Airlines
  • United Airlines
  • American Airlines
  • Merrill Lynch

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