Rajan Wilcox
The price of jet fuel varies across the world and is dependent on various factors, including the region and demand. Sources suggest that jet fuel prices are published daily by sources such as S&P Global Platts and Argus Media. These prices are based on spot prices in the physical spot market of relevant regional centers. The price of jet fuel is an important factor in the aviation industry, with airlines aiming to achieve net-zero carbon emissions by 2050.
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What You'll Learn
The price of jet fuel in the US
The price of jet fuel is an important aspect of the aviation industry and can vary across different regions. In the United States, the price of jet fuel is determined by various factors, including regional demand and supply dynamics. To make informed decisions, individuals can refer to resources such as GlobalAir.com, which provides national and regional average aviation fuel prices for different types of fuel, including JetA, 100LL, and Sustainable Aviation Fuel (SAF) across US airports and FBOs (Fixed-Base Operators).
The Jet Fuel Price Index by S&P Global Platts plays a crucial role in understanding jet fuel pricing. It offers weekly updates on jet fuel prices, price indices, yearly price averages, and the resulting impact on the fuel bills of the global airline industry. This information is particularly useful for airlines and aviation businesses, helping them manage their fuel costs and plan their operations efficiently. The index also enables comparisons with average spot prices in previous years, providing a percentage figure reflecting the overall rise or fall in markets over time.
Additionally, it is worth noting that the price of jet fuel may not include additives, and it is averaged over a significant number of FBOs reporting aircraft fuel prices. GlobalAir.com, for instance, calculates its average prices based on data from over 3,242 FBOs reporting fuel prices over the past 30 days. This data is sourced from reputable government sources, including NOAA, NWS, FAA, and NACO, ensuring that users receive current and accurate information. However, it is always recommended to refer to multiple sources and official data providers for the most up-to-date and reliable information on jet fuel pricing in the United States.
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How jet fuel prices are calculated
The price of jet fuel, also known as Jet A1, is closely aligned with the price of oil, which varies daily. For instance, in May 2020, the price of Jet A1 was 69% lower than it had been a year prior due to the collapse in oil prices caused by the Covid-19 pandemic.
The Platts Jet Fuel Price Index, published by S&P Global Platts, provides daily assessments of jet fuel spot prices in the physical spot markets of relevant regional centers. Each of these individual Platts assessments is given a weighting in the regional baskets, primarily based on the demand for jet fuel in that region. These values are then compared with the average spot prices in 2000, weighted in the same way, to generate a percentage figure reflecting the overall rise in markets compared to that base period. For example, an index value of 200 would indicate that prices have doubled since the year 2000.
The Jet Fuel Price Index provides weekly updates on the jet fuel price, price index, yearly price average, and the impact on the fuel bill of the global airline industry. The latest average global jet fuel price was $91.82 per bbl, a 1.2% decrease from the previous week.
It's important to note that the prices outlined above may not include the delivery of the fuel or the fee to refuel the aircraft. As such, the price airlines pay per kilogram of fuel may be higher, depending on the contract details. Additionally, the price that airlines pay for fuel varies depending on the price they've "hedged" the fuel at. Hedging typically involves purchasing a set quantity of fuel, and if the fuel price increases, the airline is protected from this rise. However, if the fuel price decreases, the airline will pay more for fuel than necessary, and if the airline stops flying for some reason and doesn't use the hedged fuel, they still have to pay for it, resulting in financial losses.
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Jet fuel price index
The price of jet fuel is reflected in the Platts Jet Fuel Price Index, which is published by S&P Global Platts. The index is based on daily assessments of jet fuel spot prices in the physical spot markets of relevant regional centres. Each of these individual Platts assessments is given a weighting in regional baskets, primarily based on demand for jet fuel in the region. This, in turn, generates a percentage figure that reflects the overall rise in markets compared to the base period (in this case, the year 2000). For example, an index value of 200 reflects a doubling of the price since the year 2000.
The Jet Fuel Price Index provides the latest price data from the leading energy information provider, Platts. It shows the average prices paid at the refinery for aviation jet fuel for the reported week. The global average jet fuel price can fluctuate weekly; for example, it fell by 1.2% one week to $91.82 per barrel, down from $93.01 the week before.
The price of jet fuel has historically fluctuated, with prices varying year-on-year and month-on-month. For example, on 2nd December 2022, jet fuel was $122.70 per barrel, while on 8th July 2022, it was $146.17 per barrel. On 4th March 2022, jet fuel cost $141.70 per barrel, and on 25th February 2022, it was $111.13 per barrel. In 2020, the price was much lower, at $26.17 per barrel on 8th May and $54.32 per barrel on 6th March.
The price of jet fuel can be influenced by various factors, including supply and demand, economic conditions, and geopolitical events. For example, the price of jet fuel increased after the Russian invasion of Ukraine in February 2022.
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Jet fuel price compared to aviation fuel
The price of jet fuel is a significant concern for the aviation industry, with rising prices and tightening emissions targets putting pressure on airlines. The jet fuel price is published by S&P Global Platts, which provides daily assessments of jet fuel spot prices in the physical spot market of relevant regional centers. The latest average global price for jet fuel was $91.82 per barrel, a 1.2% decrease from the previous week. The Platts Jet Fuel Price Index also provides a percentage figure reflecting the overall rise in markets compared to previous years; for instance, an index value of 200 indicates a doubling of the price since the year 2000.
While jet fuel prices are a critical factor in the aviation industry's operations, there is a growing focus on sustainable aviation fuel (SAF). SAF is made from sustainable feedstocks such as cooking oil, municipal waste, and biomass, and it is seen as a key solution to reducing the industry's carbon footprint. However, SAF currently accounts for less than 0.1% of jet fuel consumed by major US airlines, and there are challenges in achieving price parity with conventional jet fuel. Boeing CEO David Calhoun has stated that SAF "will never reach the price of jet fuel."
The cost of jet fuel and the transition to sustainable alternatives vary across different types of aircraft. For example, the Boeing 777X, with its GE9X engines, boasts a 10% improvement in fuel burn and a 5% better thrust-specific fuel consumption (TSFC) than its predecessor, the 777-300ER. The 777X's composite folding wings also contribute to a 10% block-hour efficiency gain, showcasing the advancements in fuel efficiency and sustainability in newer aircraft models.
While the aviation industry recognizes the importance of reducing greenhouse gas emissions, the transition to SAF comes with complexities. The scale-up of SAF production is being promoted through initiatives like the SAF Grand Challenge and supporting tax credits. However, as noted by the Government Accountability Office, specific performance measures are needed to ensure the success of these initiatives. Additionally, the cost of feedstock plays a significant role in the overall price of SAF, and there are challenges in achieving price parity with conventional jet fuel. Nonetheless, with aviation being responsible for around 2.5% of global CO2 emissions in 2019 and emissions projected to triple by 2050, the industry is committed to achieving net-zero carbon by 2050, in line with the Paris Agreement.
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Sustainable aviation fuel
The price of jet fuel varies and is reflected in daily assessments of jet fuel spot prices in relevant regional centers.
SAF can be made with a variety of technologies that use physical, biological, and chemical reactions to break down biomass and waste resources and recombine them into energy-dense hydrocarbons. The blend of hydrocarbons in SAF must be tuned to achieve the key properties needed to support safe and reliable aircraft operations. ASTM D7566 outlines the fuel quality standards for non-petroleum-based jet fuel and the allowable percentage of SAF in a blend with Jet A. ASTM standards are continuously updated to allow for advancements in technology to produce SAF.
The production and use of SAF offer several benefits. It can help expand the domestic biofuel industry, create new economic benefits, and secure employment opportunities. It can also provide new economic opportunities for agricultural and urban communities, improve the environment, and boost aircraft performance. Additionally, expanding biomass production can result in improved soil quality and reduced nutrient losses for farms.
To meet the goal of net-zero CO2 emissions by 2050, a massive increase in SAF production is required. Government policies and incentives play a crucial role in accelerating the deployment of SAF and making it competitive with fossil kerosene.
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