Air Transport World

Oil is a commodity except when it is not.(Waypoints)

Commodity pricing is supposed to be all about supply and demand. Sure, Starbucks can charge $4.50 for a tall double-decaf mocha cappuccino latte with skim milk, but that's because it is a branded product. The farmer in Colombia or Ecuador is pretty much at the mercy of the local buyer when it comes to how much he's going to receive for his beans. The same holds true, we're told, for airline tickets. The market determines yield and airlines scramble to cut their costs to keep pace.

So what's going on in the oil business? Why has the price of a barrel more than quadrupled since 2003? Must be that old supply/demand formula, right? Because everyone knows that oil is a commodity. Exxon may be able to charge a few cents more at the pump to put a tiger in your tank, but oil is oil. …

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