How Much Does Jet Fuel Cost in 2023?
146 views | By Hangar.Flights Contributor | Last updated on January 03, 2023
Looking up airline ticket prices in the past few months can induce a heart attack for most people. Airfare prices have risen significantly during 2022, with a record 18.6 percent increase in April, and are most likely responsible for taking a huge chunk of your holiday budget.
On the surface, the overwhelming public desire for air travel after the Coronavirus pandemic may be responsible for the expensive airline tickets. Still, the real culprit is high jet fuel prices. As the media, public, and politicians bemoan high gas prices across the United States, the exponential increase in jet fuel prices receives comparatively less attention.
According to www.mckinsey.com, U.S airline jet fuel costs in 2022 increased by 90 percent since January and rose by 215 percent from January 2021. High jet fuel prices are bad for everyone, it encourages inflation and imperils air travel recovery from the devastating effects of the pandemic. Typically, airlines pass higher jet fuel costs to consumers, which is why you couldn’t secure cheap vacation tickets this summer.
Why Does Jet Fuel Cost So Much?
You just returned from your summer vacation, but the expensive return tickets still hurt. Airline passengers this year are experiencing the painful fallouts from a perfect storm of global geopolitics resulting in high crude prices, a devastating pandemic, fuel shortages, and rising demand for air travel.
Here are three important reasons why jet fuel costs so much in 2022.
1. High Crude Oil Price.
Global crude oil prices surged in 2022, reaching a high of $122.71 in June and resulting in epic jet fuel, diesel, and gasoline prices. This phenomenon was exacerbated by the Russian invasion of Ukraine and a ban on Russian oil imports. A quick comparison between 2020 and 2022 crude oil prices clarifies the relationship between crude oil prices and jet fuel costs.
In July 2022, Brent crude price was $40.91 due to a slump in demand because of the pandemic when governments across the globe imposed lockdowns and travel restrictions. Airlines in the United States paid $1.17 per gallon for jet fuel in the same period. In July 2021, Brent crude traded at $75.17, with jet fuel selling for $1.89 per gallon. In contrast, Brent crude sold for $111.93 in July 2022, with jet fuel averaging $3.71 per gallon.
2. Inadequate Supply of Jet Fuel
Airports in the United States almost ran out of jet fuel because supply constraints within the local supply chain led to price spikes. In April 2022, jet fuel inventory levels on the United State’s East Coast were 6.5 million barrels, the lowest since 1990, according to an Energy Department report. Also, the continued shutdown of South Philadelphia’s PES refinery, which produces 20 percent of the East Coast’s jet fuel supply, continues to create shortages and drive up jet fuel costs.
3. High Diesel Fuel Cost
Spiking prices of diesel fuel powering trains, semis, and delivery trucks across the United States drove up jet fuel costs. Diesel fuel sold for $5.49 per gallon, an increase of $3.06 from the July 2020 diesel fuel price of $2.43.
4. High demand for air travel.
Higher demand for air travel should be a piece of good news.? However, the reality is much more complex. In June 2020, commercial air travel was 76.2 percent higher than the previous year, with U.S airliners jet fuel consumption hitting 1.44 billion gallons. The bad news is that the increased demand for air travel puts pressure on low jet fuel inventories, driving prices high.
How Much Does Jet Fuel Cost In 2022?
In January 2022, the average spot price of jet fuel in the United States was $2.45 per gallon before skyrocketing to $4.12 per gallon in June. The average price of Jet A Fuel in September 2022 is $3.43 per gallon.
Below is a table depicting shifts in the cost of jet fuel from January to July 2022.
|Month||Jet Fuel Spot Price||Percentage change From The Previous Month|
If you live in the United States, you may probably be accustomed to calculating the volume of jet fuel in gallons. However, several trading sites provide the price of jet fuel in other units other than gallons.
Below is a table indicating jet fuel price per liter, barrel, and metric ton in the United States as of 6th September 2022.
|Unit||Price Per Unit|
How Much Does Jet Fuel Cost Per Hour?
Airlines calculate the hourly cost of burning jet fuel to understand their aircraft’s fuel efficiency and stay within the legal fuel reserve limits required for flight delays and diversions. Knowing their airplane’s precise hourly jet fuel cost provides reliable data when imposing fuel surcharges on passengers.
Pilots and aviation experts can calculate Jet fuel hourly cost in gallons.
The table below illustrates jet fuel cost per hour for different jet aircraft types at $3.43 per gallon.
|Aircraft Size||Minimum Hourly Fuel Cost||Maximum Hourly Fuel Cost|
|Narrow Body Jets||$2,401||$2,572.5|
|Widebody Passenger Jets||$6,860||$8,575|
How Much Does Jet Fuel Cost Across The United States?
Before you ask how much jet fuel costs in your area, you should know that there are different jet fuel blends for private and commercial jet aircraft. Jet A and Jet A1 are the most common jet fuel types globally. Jet A is the most common jet fuel type in the United States, while jet aircraft operating in other countries run on Jet A1.
Factors that determine the type of jet fuel an airliner uses includes the country’s environmental regulations, which may require jet airplanes to burn cleaner fuel, weather conditions requiring higher freezing points for jet fuel, and cost.
The table below illustrates the average jet fuel price per gallon across the United States between 05-Aug-2022 and 06-Sep-2022.
|Region||Min price||Max price||Avg price|
Jet Fuel Costs Across the Globe
If you believe that high jet fuel prices are an American problem, you’d be surprised to discover that it is a global phenomenon.
Aircraft operators on every continent are paying record high prices for jet fuel, with flight routes being discontinued to improve airline’s profits. The oil and gas industry is globalized to the extent that a sneeze in the supply chain pipeline anywhere on the planet can create a global price spike within days.
If you are interested in knowing how much jet fuel costs across the global regions, here is a table showing prices for 2nd September 2022.
|Jet Fuel Costs Across the Globe||Price per gallon||Percentage Increase From Sept 2021|
|Asia & Oceania||$318.63||71.0%|
|Europe & CIS||$334.32||80.1%|
|Middle East & Africa||$322.37||74.3%|
|Latin & South America||$343.06||73.1%|
Impact of Jet Fuel Cost On U.S Airliners Operating Costs?
In 2022, U.S airlines paid an average price of $3.43 per gallon to incur a total fuel bill of $133.4 billion. Airlines make more money when they spend less on jet fuel and lose revenue when high jet fuel prices make flight tickets unaffordable for many travelers.
In June 2022, all the United States scheduled airlines spent $5.83 billion on jet fuel. This amount is a 79.9 percent increase from their June 2019 jet fuel $3.24 billion jet fuel expenditure despite consuming 0.18 billion barrels (11.1 percent) less.
Jet fuel costs make up around 12 percent of airline operating expenses, and the overall impact of high jet fuel prices will hurt airlines and travelers. For an industry trying to make a comeback from a couple of devastating years after the pandemic, the outlook is dire. However, several companies hedge their fuel costs by buying futures contracts protecting their exposure to market volatility for a fixed period.
Below is a table highlighting U.S airlines’ jet fuel expenditure between 2019 and 2022.
|Period||Jet Fuel Consumption (gallon)||Jet Fuel Cost Per Gallon||Total Jet Fuel Cost|
|June 2019||1.6 billion||$2.01||$3.24 billion|
|June 2021||1.23 billion||$2.02||$2.48 billion|
|May 2022||1.41 billion||$3.90||$5.51 billion|
|June 2022||1.44 billion||$4.04||$5.83 billion|
Perhaps the most defining theme of 2022 will be the unprecedented increase in jet fuel cost, with Jet A prices surpassing AVGAS for the first time in history. Although jet fuel price was on a downward trend by the end of August 2022, it was still higher than 2019 pre-pandemic levels. The consequences will continue destabilizing the commercial air travel industry for a long time. And no doubt, it will continue to impact our pockets during the upcoming holiday season.