HOW QUICKLY things change in the frenetic world of peak oil. At the Aer Lingus annual meeting last Friday, chairman John Sharman told shareholders that he went to bed on Thursday evening with oil at $122 a barrel and woke up the next morning to find it at $129 a barrel.
Oil hit $139 by close of business last Friday, its highest level since 1983. It has fallen since then but remains around the mid-$130s.
The airline said at last Friday's meeting that, based on current fuel costs and the economic outlook, it would "at best" break even in 2008. Chief executive Dermot Mannion said afterwards that the airline based this assumption on the price of oil being around the mid-$120s. By the end of day, given how oil had spiked, the company's assumption seemed well out of kilter.
It was no surprise, then, when brokers slashed their earnings forecasts early this week, with Davy predicting operating losses of €6.3 million this year (though with net income of €26.6 million) and €61.7 million in 2009.
Asked at the meeting what would happen if oil reached $200 a barrel, Sharman said it would "represent a step change", not just for aviation, but for power generation, cars and "for the entire means of distribution of everything we consume".
"Every industry would have to change and would change driven by the price pressure," he said.
Since he made those comments, fuel costs have mobilised fisherman into action as they blockaded the port in Cork, while hauliers are considering mounting their own blockades in protest at surging diesel costs.
Sharman told shareholders last week that air fares would rise, but that, contrary to what others in the sector were saying, the low- fares model was "here to stay".
Sharman will hope he doesn't wake up to oil at $200 a barrel just yet. But it's likely to be keeping most airline executives, fishermen and hauliers awake at night.
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