StanCollender'sCapitalGainsandGames

On a recently no-seats-left flight (Then again, how many have I been on in the past few years that haven't been full?), I said to a flight attendent (who was complaining to me about the economy; I told her to contact you and Pete) "Well, at least this airline is making money on this flight because it's so full."  She quickly responded, "Probably not."

That raises an immediate and very fundamental series of questions:

Here's this week's "Fiscal Fitness column from Roll Call.

Fiscal 2010 Budget Fight Will Make All Others Look Easy 

April 15, 2008
By Stan Collender,
Roll Call Contributing Writer
 

The Federal Reserve faces a big dilemma late this year and next year: How long can the Fed wait to raise rates and to cut back this liquidity injection? The Fed remains quite concerned about inflation; however, it has a more immediate priority -- to keep the financial system from seizing up.

It's not often that a U.S. domestic policy change causes worldwide food riots, but that's what our ethanol subsidies have done according to a World Bank analysis. On December 19, 2007, President Bush signed H.R.6 into law with a five-fold increase in the mandated use of ethanol in gasoline. That stood on top of another large ethanol mandate in another H.R.6, enacted on August 8, 2005. Corn prices have jumped from $2/bushel in 2005 to $4/bushel last year, and they've just crested $6/bushel. In 2005, 6% of U.S. corn production went to ethanol; now its up to 23%. Only now are we beginning to realize that we're not achieving any overall energy efficiency with our heavy ethanol subsidies and mandates, we're just helping U.S. corn growers and starving the world's poor.

I've been on the road this week for the Samwick family sorta-annual trip to the Bay area. The trip out here, originally scheduled for a Boston to San Francisco nonstop, would read like one of those Fortunately/Unfortunately stories we remember from childhood. It is amazing that the airline industry survives in any form with fuel costs as high as they are and fares as low as they are.

Let's run the numbers:

4 seats x 2700 miles/segment x 2 segments = 21600 seat-miles

21600 seat-miles / 60 seat miles per gallon (here or here) = 360 gallons

360 gallons x $2.60 per gallon (here) = $936