The Doom of Air Transport

One or both of two things is going to happen in the very near future: kerosene is going to become a lot more dear as light, sweet crude fades away to the specialty corner of refiners' crude oil menus; and most of the people now flying or sending cargo by air will become too poor to afford the luxury.

The implications of this are devastating for a huge chunk of the developed world's economy. Aside from the airline and airport industry, the pain will be felt most acutely in regions dependent on air tourism, and airplane building.

According to the Boeing company, air travel has been growing even faster than World GDP. When World GDP shrinks as we expect, air travel can be expected to shrink much, much faster as GDP shrinkage will likely be skewed towards OECD countries who are the primary users of air travel.

Losses can be expected to pervasive and vast. Airports themselves represent hundreds of billions (maybe trillions) of dollars of sunk capital. That capital supports a great quantity of municipal bonds, and the income of investors who depend on them. The collapse of air transport should prove quite a bit more economically disruptive than the failures the 2007 Depression to date, even including the likely end of the 'Big 3' auto makers.

Of course, it will all come as a 'surprise', and 'No one saw this coming,' will again be the refrain. We wish we could say, "You read it here first, folks," but people have been warning about the demise of air travel for decades. If these Cassandras had been listened to, the USA would still have a decent passenger rail system.

It's a good thing boats use the left-overs from refining oil...