WEBVTT - Spirit Airlines Shuts Down Operations 0:00:00.080 --> 0:00:10.160 Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Bloomberg 0:00:10.240 --> 0:00:15.920 This Weekend Podcast with David Gura, Christina Raffini, and Lisa Matteo. 0:00:17.680 --> 0:00:20.560 Thanks for joining us for today's selection of conversations from 0:00:20.600 --> 0:00:20.959 the show. 0:00:21.200 --> 0:00:23.479 You can listen to our favorite discussions right here on 0:00:23.520 --> 0:00:25.800 the podcast, but also make sure to join us live 0:00:25.960 --> 0:00:28.960 every Saturday and Sunday morning starting at seven am Easter. 0:00:29.160 --> 0:00:32.760 We're on Bloomberg Television, Radio and the Bloomberg Business App, 0:00:33.040 --> 0:00:38.240 bringing you unique takes and in depth interviews on news, politics, lifestyle, 0:00:38.360 --> 0:00:39.120 and culture. 0:00:41.080 --> 0:00:43.839 As we talk constantly, it seems about the affordability crisis 0:00:43.840 --> 0:00:46.880 here in this country. Everything is getting more expensive, including travel, 0:00:46.920 --> 0:00:49.280 and this morning our top story another one hits the dust. 0:00:49.479 --> 0:00:53.160 Spirit Airlines has ceased operation and grounded its fleet following 0:00:53.159 --> 0:00:56.120 a collapse of that final federal bailout proposal. 0:00:56.160 --> 0:00:59.280 This morning, Transportation sectory Sean Duffy taking to social media 0:00:59.400 --> 0:01:02.960 stating the Department of Transportation is working with major US 0:01:02.960 --> 0:01:07.240 carriers including United, Delta, Jet Blue, and Southwest to cap 0:01:07.280 --> 0:01:11.000 ticket prices for stranded Spirit Airlines passengers, while others offer 0:01:11.080 --> 0:01:15.120 reduced fares and employee support Following service disruptions joining us now. 0:01:15.160 --> 0:01:17.280 Jeff Mason, our White House correspondent, back with us on set, 0:01:17.319 --> 0:01:19.720 along with the Points Guy, Managing editor Clint Henderson, and 0:01:19.720 --> 0:01:23.640 Patrick Dehan had patrolling analysis for Gas Buddy. As Lisa 0:01:23.680 --> 0:01:25.800 mentioned just a moment ago, this is a fuel story, 0:01:25.880 --> 0:01:27.560 very much of fuel story, so we'll get into both 0:01:27.640 --> 0:01:31.120 how that's affecting air travel and cars and trucks as well. 0:01:31.200 --> 0:01:33.280 Jeff Mason, let me start with you and just get 0:01:33.280 --> 0:01:35.160 your perspective on how this fell apart. We heard the 0:01:35.200 --> 0:01:36.920 President yesterday as he made his way from the White 0:01:36.920 --> 0:01:40.480 House to Florida, indicating that this deal wasn't dead. He 0:01:40.520 --> 0:01:42.280 was waiting to see I guess what was on the table. 0:01:42.800 --> 0:01:44.560 And then around three o'clock this morning we heard from 0:01:44.560 --> 0:01:46.560 Spirit that they were in fact closing their doors. What 0:01:46.640 --> 0:01:49.280 happened between when he was walking outside the White House 0:01:49.480 --> 0:01:52.320 in the Rose Garden to when we got that announcement 0:01:52.360 --> 0:01:53.440 early in the morning today. 0:01:53.280 --> 0:01:55.240 Well, I think it sounds like it just didn't turn 0:01:55.240 --> 0:01:57.080 out to be a good enough deal for the government 0:01:57.160 --> 0:01:59.720 and the President, as we've talked about before, likes to 0:02:00.000 --> 0:02:02.320 describe himself as a deal maker. He wrote a book 0:02:02.360 --> 0:02:04.800 about being a deal maker. It's something that's actually hanging 0:02:04.840 --> 0:02:06.360 over the Iran war right. 0:02:06.160 --> 0:02:06.800 Now as well. 0:02:06.880 --> 0:02:09.440 He wants a good deal and it just wasn't a 0:02:09.440 --> 0:02:12.200 good enough deal for him, which is actually sort of understandable, 0:02:12.360 --> 0:02:15.639 because running an airline is not easy, and not just 0:02:15.760 --> 0:02:18.800 running the airline, but the financials of this particular airline 0:02:18.800 --> 0:02:22.360 were obviously so poor that it's now gone out of business, 0:02:23.040 --> 0:02:25.440 and it just didn't turn out to be what they wanted. 0:02:25.919 --> 0:02:26.880 From the federal. 0:02:26.600 --> 0:02:28.760 Side, we're talking about the constraints of trying to run 0:02:28.760 --> 0:02:32.160 a budget airline in this country versus europe. Negotiations with 0:02:32.200 --> 0:02:34.360 really only one pilot's union drives up costs, and then 0:02:34.440 --> 0:02:36.519 of course fuel is the big cost, and it's hard 0:02:36.520 --> 0:02:37.360 to do trying to. 0:02:37.360 --> 0:02:38.919 Keep those prices low. 0:02:39.480 --> 0:02:42.920 Speaking of Clint, I want to ask you, if you 0:02:42.960 --> 0:02:45.720 are a consumer and you liked this budget airline option, 0:02:46.720 --> 0:02:49.200 where are you going to notice this the most, Which 0:02:49.320 --> 0:02:51.600 routes are going to take a hit, and how many 0:02:51.639 --> 0:02:54.720 passengers have any idea how many people are currently stranded 0:02:54.840 --> 0:02:55.680 or without flights. 0:02:56.800 --> 0:02:59.160 We don't know the exact number of stranded passengers, but 0:02:59.200 --> 0:03:01.720 I will say all the major airlines have stepped up 0:03:01.720 --> 0:03:03.359 to offer these rescue fares. 0:03:03.840 --> 0:03:06.080 So that's really encouraging to see. 0:03:06.120 --> 0:03:10.200 I know, American, Delta United, everyone's offering to help out 0:03:10.560 --> 0:03:14.320 stranded passengers here. You know, as far as it goes 0:03:14.320 --> 0:03:17.880 with pricing in any market that Spirit was operating, you're 0:03:17.880 --> 0:03:21.560 going to see fares jump almost immediately. We saw Spirit 0:03:21.639 --> 0:03:25.200 pull out of Minneapolis not too long ago, and Delta 0:03:25.280 --> 0:03:29.320 race fares almost immediately by a substantial margin. 0:03:29.440 --> 0:03:33.200 So that's why, you know, we all love to hate Spirit, but. 0:03:33.240 --> 0:03:35.360 You're really going to hate it when they leave markets 0:03:35.360 --> 0:03:38.560 like Orlando for Lauderdale, you know, places where they drive 0:03:38.680 --> 0:03:41.200 costs down, you're going to see prices really spike. 0:03:41.480 --> 0:03:44.040 Yeah, earlier I was referring it to it as the 0:03:44.120 --> 0:03:47.040 waffle House of the air To be clear, I like 0:03:47.160 --> 0:03:49.840 waffle House. I'm a big waffle House fan. Sometimes it 0:03:49.880 --> 0:03:52.600 hits the spot, and with Spirits sometimes you just needed 0:03:52.600 --> 0:03:54.520 to get there, and now that's one less option. 0:03:54.360 --> 0:03:56.640 I guess Clint I was asking Jeff about the kind 0:03:56.640 --> 0:03:58.800 of political nature of all of this, how the president 0:03:58.840 --> 0:04:01.760 was looking at this perspective. Deal take us behind the 0:04:01.760 --> 0:04:04.200 scenes at this company. This is an airline that had 0:04:04.240 --> 0:04:06.760 gone through two Chapter eleven filings in the last year. 0:04:06.800 --> 0:04:08.680 I guess was retaining some optimism here that it could 0:04:08.720 --> 0:04:11.920 make it through this latest stretch. How much of this 0:04:12.360 --> 0:04:15.720 its decision to close down, is attributable to just general 0:04:15.720 --> 0:04:18.560 problems within the company or are is it attributable to 0:04:18.600 --> 0:04:20.200 just the fact that fuel prices have gone up as 0:04:20.240 --> 0:04:21.120 much as they have recently. 0:04:21.839 --> 0:04:23.600 Look, the cost of jet fuel was the nail on 0:04:23.640 --> 0:04:26.760 the coffin. But the truth is Spirit has not really 0:04:26.800 --> 0:04:29.960 been a profitable company for half of a decade now. 0:04:30.080 --> 0:04:33.599 So my fear is that this is not just a 0:04:33.640 --> 0:04:38.320 Spirit problem. This is a low cost carrier model problem. 0:04:38.680 --> 0:04:41.600 So you know, a bailout of the other low cost 0:04:41.600 --> 0:04:44.280 carriers or even the mainline carriers could be coming if 0:04:44.320 --> 0:04:46.320 the cost of jet fuel remains. 0:04:45.920 --> 0:04:48.120 As high as it is. You know, I'm particularly worried 0:04:48.160 --> 0:04:49.520 about airlines like Jet Blue. 0:04:50.520 --> 0:04:54.159 You know, the truth is, it's very hard to remain 0:04:54.240 --> 0:04:55.719 profitable with the. 0:04:55.600 --> 0:04:58.160 Cost of jet fuel as high as it is. 0:04:58.520 --> 0:05:00.960 But my fears we end up with just the mainline 0:05:01.000 --> 0:05:06.400 carriers left, you know, Alaska and Hawaiian, Southwest, American, Delta United, 0:05:06.480 --> 0:05:09.160 and that means higher fares for all of us. Already, 0:05:09.200 --> 0:05:12.400 we've seen fars jump between ten and thirty for summer travel, 0:05:12.520 --> 0:05:14.240 so fasten your seatbelts. 0:05:14.279 --> 0:05:18.520 On that front, the President has been wanting to have 0:05:18.839 --> 0:05:21.000 a tour around the country. This is something that we 0:05:21.040 --> 0:05:24.120 talked about before, to talk about his economy, to talk 0:05:24.160 --> 0:05:26.160 about his success. 0:05:26.320 --> 0:05:27.680 He can't afford the fuel. I'm just joking. 0:05:27.760 --> 0:05:29.080 Yeah, he probably can. 0:05:29.920 --> 0:05:31.159 He probably can't. 0:05:31.600 --> 0:05:33.160 Sorry, not at all. 0:05:33.279 --> 0:05:36.560 The irony of him wanting to talk about his record 0:05:36.720 --> 0:05:39.600 in the months before the midterms is it's his actions 0:05:39.600 --> 0:05:42.440 that are leading to this going up, leading to the 0:05:42.480 --> 0:05:46.440 fuel prices going up, I mean leading to inflation, the 0:05:46.480 --> 0:05:49.159 inflationary impact of the war, of the oil prices, of 0:05:49.360 --> 0:05:53.160 gasoline prices. It makes a tough political sell when you're 0:05:53.160 --> 0:05:55.320 trying to hold on to control of Congress. 0:05:55.600 --> 0:05:59.000 So Patrick, on that note, gas prices we saw in 0:05:59.000 --> 0:06:03.320 California were really high this week. Planes, trains, automobiles, maybe 0:06:03.360 --> 0:06:05.880 not trains, but definitely cruise ships if you are trying 0:06:05.920 --> 0:06:07.600 to get around, if you're trying to have any kind 0:06:07.640 --> 0:06:10.640 of vacation. Seems like all of these options are not great. 0:06:10.680 --> 0:06:13.120 And just when it comes to affordability, where are Americans 0:06:13.200 --> 0:06:15.679 really going to start to feel these high gas prices 0:06:15.720 --> 0:06:16.599 the most? 0:06:17.200 --> 0:06:17.479 Yeah? 0:06:17.520 --> 0:06:20.600 Absolutely, I mean West coast areas you're already seeing prices 0:06:20.640 --> 0:06:24.200 over six dollars a gallon in California, you know, so 0:06:24.240 --> 0:06:26.440 the West Coast may not be the place to travel 0:06:26.480 --> 0:06:30.040 this summer. And the nation's interior, whether it's the Plains, 0:06:30.120 --> 0:06:32.600 the Rockies, not so much the Great Lakes right now 0:06:32.680 --> 0:06:35.640 due to some refinery issues, but the nation's interior is 0:06:35.640 --> 0:06:37.600 going to be a little bit more insulated from those 0:06:37.640 --> 0:06:40.599 higher prices this year. And that's just because that fuel 0:06:40.640 --> 0:06:43.320 that is produced in those areas the Plaines and Rockies 0:06:43.360 --> 0:06:47.080 can't as easily be exported as what's produced in say 0:06:47.120 --> 0:06:49.839 the Gulf Coast or the East Coast or the West Coast, 0:06:49.839 --> 0:06:53.040 where we're seeing a lot of pressure now from overseas markets, 0:06:53.040 --> 0:06:57.040 from diesel to jet fuel to gasoline being exported. In fact, 0:06:57.080 --> 0:06:59.920 in the last week alone, the EIA reports that nearly 0:07:00.200 --> 0:07:03.800 one hundred million barrels of oil and refined products have 0:07:03.920 --> 0:07:06.480 left US shores, and that's going to put an immense 0:07:06.480 --> 0:07:09.560 amount of pressure, especially on the West Coast where California 0:07:09.600 --> 0:07:11.679 now with the loss of two refineries in the last 0:07:11.720 --> 0:07:13.720 eight months, that's far more critical. 0:07:14.160 --> 0:07:16.680 California now left to import fuel. 0:07:16.920 --> 0:07:18.880 And keep in mind the interesting part of this is 0:07:18.920 --> 0:07:22.360 some airlines you mentioned Spirit Norse Atlantic saying we're done 0:07:22.360 --> 0:07:24.920 with California because of the risk of a jet fuel 0:07:24.920 --> 0:07:28.040 issue on the West Coast. It's certainly elevated. It's certainly 0:07:28.040 --> 0:07:30.760 not what it might be in areas like Europe. But 0:07:31.360 --> 0:07:34.120 you talk about jet fuel, the prices doubled, some airlines 0:07:34.120 --> 0:07:36.280 saying we're not going to gamble on the West coast. 0:07:36.320 --> 0:07:38.200 And look at all the airlines pulling back from some 0:07:38.240 --> 0:07:41.720 of their routes looking at more efficient boosting capacity. I mean, 0:07:41.760 --> 0:07:45.560 when of Boeing seven eighty seven to nine costs you know, 0:07:45.720 --> 0:07:48.320 hundreds of thousands of dollars to fill, You're talking about 0:07:48.360 --> 0:07:51.720 over five hundred dollars on an average seat map for 0:07:51.800 --> 0:07:54.720 those three hundred seats. It's incredibly expensive right now to 0:07:54.760 --> 0:07:58.119 fly these airlines overseas. The long hauls will probably stick, 0:07:58.160 --> 0:08:01.600 but across the board, from gas to jet fuel to diesel, 0:08:01.920 --> 0:08:04.000 consumers are going to be feeling it left and right 0:08:04.040 --> 0:08:05.000 this summer. 0:08:04.920 --> 0:08:09.320 Patrick, gaze into the gas, Buddy glass Ball, give us 0:08:09.360 --> 0:08:11.560 your clairvoyant take here of what this looks like in 0:08:11.600 --> 0:08:13.880 the summertime. We hear from Kevin Hasset, the President's closest 0:08:13.920 --> 0:08:17.120 economic advisor that these prices could go down as quickly 0:08:17.160 --> 0:08:19.720 as they've come up. It's something for the President says, well, 0:08:19.720 --> 0:08:21.880 this is a blip. I think he said about the 0:08:21.880 --> 0:08:23.720 surge that we've seen in in fuel prices. 0:08:24.800 --> 0:08:25.800 Patrick, what's it going to take. 0:08:25.960 --> 0:08:29.080 Say we had a cessation of fighting that was lasting, 0:08:29.400 --> 0:08:32.600 permanent in the Middle East, how soon would prices recover 0:08:32.640 --> 0:08:33.240 from fact they do? 0:08:34.720 --> 0:08:37.040 Well, you know, you talk about prices going back to 0:08:37.080 --> 0:08:39.439 their pre war level. I think that's next to impossible 0:08:39.440 --> 0:08:42.360 to happen, probably for the good majority of the rest 0:08:42.440 --> 0:08:45.240 of this year, unless the pendulum word to swing wildly 0:08:45.280 --> 0:08:48.520 opened very quickly. I mean, everything would have to be 0:08:48.559 --> 0:08:50.880 going backwards for us to get to that point where 0:08:50.920 --> 0:08:53.439 that's possible. Right, we're not seeing any agreement between the 0:08:53.520 --> 0:08:56.160 US and Iran. We're far apart on that. So strait 0:08:56.240 --> 0:08:58.880 was open until it was closed. So even if there 0:08:58.920 --> 0:09:00.720 is some clarity, it's going to take a little bit 0:09:00.720 --> 0:09:04.160 of verification and time to build confidence. I don't think 0:09:04.200 --> 0:09:06.920 we're going to see any real case of gas prices 0:09:06.960 --> 0:09:10.880 this summer falling below four dollars. Maybe if the straight reopens, 0:09:10.880 --> 0:09:12.920 we could see the national average falling to the mid 0:09:12.960 --> 0:09:16.040 to upper three dollar range. But even then those prices 0:09:16.040 --> 0:09:18.559 are still seventy five cents to a dollar a gallon, 0:09:18.600 --> 0:09:21.520 more than what we're seeing over the winters. So Americans 0:09:21.559 --> 0:09:23.600 are going to have to buckle up. I think we're 0:09:23.640 --> 0:09:26.520 going to start a Memorial Day starting the summer driving 0:09:26.559 --> 0:09:29.720 season with prices over four dollars, And if the President 0:09:29.760 --> 0:09:32.000 doesn't act on reopening the Straight and coming up with 0:09:32.120 --> 0:09:36.680 some solution, that gas prices this summer could even. 0:09:36.600 --> 0:09:37.800 Hit five dollars a gallon. 0:09:37.840 --> 0:09:40.120 Heck, they're already five dollars a gallon on the West Coast, 0:09:40.480 --> 0:09:42.839 in the Great Lakes, they're pushing five dollars a gallon. 0:09:43.040 --> 0:09:45.480 That may become more of a reality for much more 0:09:45.480 --> 0:09:48.000 of the country if the Strait doesn't soon reopen. 0:09:48.120 --> 0:09:49.839 Patrick, I only want to get back to airplanes here. 0:09:49.840 --> 0:09:52.000 But you mentioned those gas prices price we're paying at 0:09:52.000 --> 0:09:54.000 the pump. I know that there's been some speculation the 0:09:54.000 --> 0:09:57.600 President might, through executive action, try to remove that gas tax. 0:09:57.960 --> 0:10:00.880 Would that make a notional difference for those of us 0:10:00.880 --> 0:10:01.280 who have. 0:10:01.200 --> 0:10:02.439 Cars and drive around. 0:10:03.480 --> 0:10:05.840 Well, first of all, that would require an Act of 0:10:05.880 --> 0:10:08.680 Congress to waive that federal gas tax of eighteen point 0:10:08.760 --> 0:10:09.319 four cents. 0:10:09.400 --> 0:10:10.400 Let me color it this. 0:10:10.320 --> 0:10:13.640 Way that Georgia and in Indiana both have gas tax 0:10:13.640 --> 0:10:15.800 holidays right now, but you look at what happened in 0:10:15.840 --> 0:10:18.440 the Great Lakes, and Indiana now is paying the exact 0:10:18.520 --> 0:10:21.239 same as Michigan and Ohio when it comes to gasoline. 0:10:21.240 --> 0:10:24.600 Those do to some refining issues. States have tried this. 0:10:24.679 --> 0:10:27.160 In fact, I think Texas is now talking about other 0:10:27.240 --> 0:10:30.560 states are looking at this. The Canadian government, for their part, 0:10:30.880 --> 0:10:34.640 has also eased a ten cent a leader in Canada 0:10:34.880 --> 0:10:38.600 excise tax. So it would work, but it will require Congress, 0:10:38.600 --> 0:10:41.320 and that's anything but guaranteed. Right now, it would be 0:10:41.440 --> 0:10:44.480 temper I mean, eighteen cents when the national average is 0:10:44.520 --> 0:10:47.120 four forty five a gallon is kind of like rubbing 0:10:47.200 --> 0:10:49.960 salt in the wound. But back to the airlines, by 0:10:50.000 --> 0:10:52.120 the way, earlier this week you talk about trying to 0:10:52.200 --> 0:10:54.000 run an airline in this type of environment. 0:10:54.280 --> 0:10:55.920 Jet fuel in Chicago. 0:10:55.520 --> 0:10:58.720 Briefly spiked well over five dollars a gallon just this week, 0:10:58.960 --> 0:11:01.160 and you're seeing a lot of the these hotspots from coast 0:11:01.240 --> 0:11:05.160 to coast, inland and areas of the coastal region. Jet 0:11:05.200 --> 0:11:07.560 fuel's just all over the map. You fly into Dallas 0:11:07.559 --> 0:11:10.120 and jet feels three eighty. You fly into Chicago and 0:11:10.160 --> 0:11:12.079 it's over five dollars a gallon. That's got to be 0:11:12.120 --> 0:11:14.080 a nightmare for airlines to sort this out. 0:11:14.600 --> 0:11:16.400 Jeff talked to us about the messaging from the White 0:11:16.440 --> 0:11:19.520 House because the President last night was essentially saying oil 0:11:19.600 --> 0:11:21.560 is high, but it could be much higher. It could 0:11:21.559 --> 0:11:23.160 have been much higher. It's actually not as high as 0:11:23.200 --> 0:11:26.000 we expected it to be. Is that going to work 0:11:26.080 --> 0:11:28.720 if we're rolling into midterms and these prices are still there, Because, 0:11:28.720 --> 0:11:31.960 as we've been talking about, ad nauseum insurance is what 0:11:32.000 --> 0:11:34.160 the shipping industry kind of runs on. And even if 0:11:34.200 --> 0:11:37.000 the straight were to open tomorrow, the threshold not only 0:11:37.040 --> 0:11:39.200 to pay these sailors and captains to be willing to 0:11:39.240 --> 0:11:41.560 take that risk, but just the risk factor is going 0:11:41.640 --> 0:11:43.520 to make insurance costs go up, which is going to 0:11:43.520 --> 0:11:45.480 make shippy We're not going to get back to that 0:11:45.520 --> 0:11:46.640 floor anytime soon. 0:11:46.840 --> 0:11:49.199 Well, what the quote that you just decided is vintage 0:11:49.240 --> 0:11:52.000 Donald Trump. I mean to say, oh, I thought it 0:11:52.040 --> 0:11:53.880 was going to be higher, This isn't that bad, And 0:11:53.960 --> 0:11:55.880 also to predict that they're going to come down just 0:11:55.960 --> 0:12:00.920 like that. He doesn't know that, and the reality is 0:12:01.040 --> 0:12:02.760 you're talking about five dollars gas. 0:12:02.840 --> 0:12:03.600 Good grief. 0:12:03.679 --> 0:12:07.120 I mean, being over four dollars a gallon is already painful. 0:12:07.120 --> 0:12:09.240 But if consumers are going into the voting booths in 0:12:09.280 --> 0:12:12.440 November having paid five dollars a gallon for gas, or 0:12:12.480 --> 0:12:14.960 perhaps still paying that much, it's going to be very 0:12:14.960 --> 0:12:16.520 painful for Republicans. 0:12:16.800 --> 0:12:19.079 Clint Henderson with the points guy, let me ask you 0:12:19.400 --> 0:12:22.199 about what you're looking for from the administration going forward here. 0:12:22.280 --> 0:12:25.520 So we have Transportation Secretary Sean Duffy kind of tweeting 0:12:25.559 --> 0:12:27.760 through this a lot of posts on social media this 0:12:27.800 --> 0:12:30.120 morning about what should happen, noting the fact that there 0:12:30.160 --> 0:12:32.200 are going to be these lower fares for passengers who 0:12:32.240 --> 0:12:34.920 are stranded. What is as you see at the role 0:12:34.960 --> 0:12:37.559 of the federal government here as an airline goes under 0:12:37.920 --> 0:12:39.520 and passengers are picking up the pieces. 0:12:40.760 --> 0:12:43.800 Yeah, well, it's really unusual in the United States to 0:12:43.840 --> 0:12:45.040 see an airline. 0:12:44.679 --> 0:12:45.440 Liquid hit like this. 0:12:45.600 --> 0:12:48.120 I'm really glad the government stepped in to try to 0:12:48.200 --> 0:12:51.280 encourage other airlines to take care of these passengers, because 0:12:51.280 --> 0:12:54.080 we really just haven't seen anything like this since two 0:12:54.120 --> 0:12:58.040 thousand and six, two thousand and eight. I expect more consolidation, 0:12:58.600 --> 0:13:00.720 you know, as far as what the government can do, 0:13:00.920 --> 0:13:04.200 I'd love to see them reopen the straight aforemos. That's 0:13:04.640 --> 0:13:06.880 that's gonna be the big answer to a lot of 0:13:06.920 --> 0:13:09.360 these issues. But right now, at the points guy, we're 0:13:09.360 --> 0:13:12.480 telling people, go ahead and book all your flights for 0:13:12.520 --> 0:13:14.000 the rest of the year if you can afford it. 0:13:14.080 --> 0:13:16.960 Lock in prices now, because I do think we're just 0:13:17.000 --> 0:13:20.400 going up from here. I'm booked through spring of next year, 0:13:20.800 --> 0:13:22.360 just because I want to get ahead of it. Because 0:13:22.679 --> 0:13:26.040 it's not just price of tickets, it's fuel surcharges being 0:13:26.080 --> 0:13:29.079 added and rising bag fees. The airlines are going to 0:13:29.120 --> 0:13:31.120 try to recoup this as best they can, and the 0:13:31.160 --> 0:13:34.120 consumers are going to pay for it. And remember, because 0:13:34.160 --> 0:13:37.560 the airlines are also reducing capacity unless we see a 0:13:37.600 --> 0:13:42.720 drop in demand, there's more passengers trying to get fewer seats, 0:13:42.840 --> 0:13:45.640 and that also leads to price increases. 0:13:45.679 --> 0:13:47.480 Let's got spring break already. 0:13:47.760 --> 0:13:48.200 Aspire. 0:13:49.520 --> 0:13:51.360 I aspire to have a kind of life where I can 0:13:51.360 --> 0:13:53.839 plan trips out two years and ad fancies guys hard time. 0:13:53.840 --> 0:13:55.400 Imagine if I don't want to pay more. 0:13:55.240 --> 0:13:57.439 Than I have to, that's I have already been playing 0:13:57.440 --> 0:14:00.400 this summer. Jeff, weeple think about thirty seconds, but would 0:14:00.440 --> 0:14:02.000 like the government to reopen the strait. 0:14:02.040 --> 0:14:02.640 How's that going? 0:14:03.120 --> 0:14:05.520 I mean, the President said this week that he's unhappy 0:14:05.559 --> 0:14:08.200 with the deal or the most recent proposal from Iran. 0:14:08.640 --> 0:14:10.840 It doesn't suggest that there's going to be any agreement 0:14:10.880 --> 0:14:12.560 anytime soon, and there's going to have to be an 0:14:12.600 --> 0:14:14.839 agreement before the strait is opened again. 0:14:14.880 --> 0:14:18.319 And Iran semi official news agency saying something similarly bleak 0:14:18.360 --> 0:14:18.880 this morning. 0:14:19.000 --> 0:14:21.240 All right, thanks to all Jeff Maxon, our White House 0:14:21.240 --> 0:14:22.920 correspondent here on set with us in New York, Clint 0:14:22.920 --> 0:14:25.480 Henderson with the points guy Patrick Dehan of Gasbuddy, giving 0:14:25.520 --> 0:14:27.160 us an update on those fuel prices, which of course 0:14:27.160 --> 0:14:30.400 were a huge factor in Spirit's decision, so much as 0:14:30.440 --> 0:14:32.400 it was Spirit's decision to close down news that we 0:14:32.440 --> 0:14:35.240 got this morning at about three o'clock Wall Street Time. 0:14:37.680 --> 0:14:40.200 Stay with us for more on Bloomberg this weekend. 0:14:40.520 --> 0:14:55.040 Right after this, the two biggest US oil companies reported 0:14:55.040 --> 0:14:57.720 earnings Friday for the first time since the Iran war began. 0:14:58.240 --> 0:15:01.600 Exceon and Chevron beat xpecations, with oil and gas prices 0:15:01.760 --> 0:15:04.400 rising since February which offset drop and supply. 0:15:04.600 --> 0:15:07.200 We spoke with our colleague Javier bloss columnists for Energy 0:15:07.240 --> 0:15:07.760 and Commodities. 0:15:07.760 --> 0:15:09.280 Here Bloomberg opinion that the. 0:15:09.240 --> 0:15:11.920 Ongoing threat to global energy supplies take a listen. 0:15:12.440 --> 0:15:15.520 It's not just the price of oil and natural gas 0:15:15.520 --> 0:15:16.960 outside the North. 0:15:16.720 --> 0:15:17.880 America that have gone up. 0:15:17.920 --> 0:15:22.160 Also, refining margins have been incredibly high through the month 0:15:22.240 --> 0:15:26.680 of March, and both Exon and Chevron indicated that they 0:15:26.760 --> 0:15:29.800 run the refinery is very hard through that period. So 0:15:29.840 --> 0:15:32.080 I think that that is one of the key reasons 0:15:32.120 --> 0:15:35.040 that the results have been as good and surprising to 0:15:35.080 --> 0:15:36.360 the upside to Water Street. 0:15:36.920 --> 0:15:39.240 We've been hearing from the administration. President Trump meant with 0:15:39.280 --> 0:15:41.280 a head of sentcom and it seems like they want 0:15:41.320 --> 0:15:44.040 to stick with this blockade. I have two questions for you. 0:15:44.240 --> 0:15:47.440 How much pain is this actually inflicting on Iran? And 0:15:47.520 --> 0:15:50.280 talk to us about the storage issue. The administration says 0:15:50.280 --> 0:15:51.640 Aaron is running out of storage. 0:15:51.720 --> 0:15:52.480 Is that real or not? 0:15:53.920 --> 0:15:56.960 Well, Stepping from the first part of your question, it's 0:15:57.000 --> 0:16:01.680 inflicting quite a lot of pain. Iran effectively is losing 0:16:01.720 --> 0:16:04.920 around one hundred and seventy five million million dollars a 0:16:05.040 --> 0:16:08.680 day in lost income from the oil revenue from the 0:16:08.720 --> 0:16:11.800 oil esports. But the key question is that enough for 0:16:11.920 --> 0:16:15.480 Iran to come to the negotiation table with an offer 0:16:15.960 --> 0:16:18.720 that is good enough for President Trump, And the answer 0:16:19.160 --> 0:16:23.240 potentially is not enough. Iran made quite a lot of 0:16:23.280 --> 0:16:26.280 money for the first two months of the war where 0:16:26.360 --> 0:16:29.200 it was able, and the US have no problem letting 0:16:29.560 --> 0:16:32.960 Iran selling his oil. So in some way they have 0:16:33.120 --> 0:16:36.640 some money that they cash in in the early days 0:16:36.680 --> 0:16:39.640 and weeks of the war, and they can't use that 0:16:39.800 --> 0:16:43.040 extra money that they made to cushion the current blow. 0:16:43.640 --> 0:16:47.440 On the question of is going to be any long 0:16:47.520 --> 0:16:51.320 term damage to the oil wells, my Viieo is no. 0:16:51.760 --> 0:16:56.160 First of all, Iran is still loading oil into tankers. 0:16:56.200 --> 0:16:59.600 It was on Friday according to satellite pictures that we 0:16:59.600 --> 0:17:02.520 were with you in a bloomberg loading a super tanker 0:17:02.640 --> 0:17:05.720 at car Island. So that's an indication that Iran still 0:17:05.760 --> 0:17:08.920 has access to tankeys that they were inside the Persian 0:17:08.960 --> 0:17:12.359 golf when the blockade started, and it has on short storage. 0:17:12.440 --> 0:17:15.640 So I don't see Iran having to start reducing production 0:17:16.080 --> 0:17:19.800 at the earliest until probably the middle of May. And 0:17:19.920 --> 0:17:24.199 will that cause some damage, Probably not, And even if 0:17:24.200 --> 0:17:27.760 there was some damage will be that really what is 0:17:27.760 --> 0:17:29.960 going to proad the Iranian authorities to come to the 0:17:30.000 --> 0:17:33.760 table with an offer. The President Trump is satisfied Again, 0:17:34.400 --> 0:17:35.240 I don't think so. 0:17:35.920 --> 0:17:38.639 In the midst of this ceasfire, how much production is 0:17:38.720 --> 0:17:41.480 ron able to do? Just just give us your advantage 0:17:41.560 --> 0:17:44.800 on the gree to which oil production run continues to pace. 0:17:46.160 --> 0:17:49.520 Well, if we look at crude oil and condensates, Iran 0:17:49.760 --> 0:17:52.440 was producing around three and a half million borrows a day, 0:17:52.920 --> 0:17:57.320 sporting about one point eight million borrows a day, and 0:17:57.440 --> 0:18:00.640 the rest goes to the domestic market. So Iran needs 0:18:00.720 --> 0:18:04.159 to produce somewhere between one seven and one eight million 0:18:04.200 --> 0:18:05.560 borrowers a day used. 0:18:05.359 --> 0:18:07.119 To keep the country fuel. 0:18:07.960 --> 0:18:10.800 Perhaps the demand now in Iran is a bit lower 0:18:10.840 --> 0:18:14.080 than otherwise because of the destruction of the world, because 0:18:14.080 --> 0:18:18.199 people are not traveling because mobility is down. But Iran 0:18:18.320 --> 0:18:21.280 is a big oil consumer on his own, so significant 0:18:21.359 --> 0:18:24.600 chunk or his production goes into the domestic market and 0:18:24.640 --> 0:18:27.480 then the rest of it goes to the esport market. 0:18:27.480 --> 0:18:30.560 At the moment, Iran is loading still tankers, but those 0:18:30.600 --> 0:18:33.919 tankers cannot really reach the high seas that are stopped 0:18:33.920 --> 0:18:37.120 by the US Navy. That's where we are today. At 0:18:37.119 --> 0:18:39.520 some point they will run out of tankers. They will 0:18:39.520 --> 0:18:42.320 need to start a store in the oil on shore 0:18:43.400 --> 0:18:46.040 into tanks, and at some point they will have to 0:18:46.240 --> 0:18:49.439