White House paying close attention to rising U.S. jet fuel prices

A pipe transporting jet fuel offloaded from barges in seen at Kinder Morgan's Westridge Terminal on Burrard Inlet in Burnaby
A pipe transporting jet fuel offloaded from barges in seen at Kinder Morgan's Westridge Terminal on Burrard Inlet in Burnaby, British Columbia, Canada November 18, 2016. REUTERS/Chris Helgren

WASHINGTON, April 6 (Reuters) - White House National Economic Council Director Brian Deese said Wednesday the administration is closely monitoring rising jet fuel prices that could threaten the air travel recovery.

"Jet fuel is something that we are paying close attention to and monitoring and is a direct bi-product of the impact of Russia's invasion of Ukraine," Deese said at a breakfast with reporters sponsored by the Christian Science Monitor.

Costs in the United States for jet fuel have surged, particularly on the East Coast, which largely relies on shipments on the Texas-to-New Jersey Colonial Pipeline for refined products, as well as imports from Europe.

High jet fuel prices around the world are hitting air carriers and travelers just as air travel was starting to recover from COVID-19 restrictions in much of the world. Fare hikes risk undermining an air travel recovery that has gained momentum as international border curbs ease.

U.S. airlines said last month they had been raising airfares to account for some of the costs of rising fuel prices in the face of strong passenger demand.

Fuel is airlines' second-biggest expense after labor, but major U.S. airlines do not hedge against volatile oil prices like most European airlines.

The industry typically looks to offset fuel costs with higher fares.

East Coast jet fuel costs have reached record highs in recent days, with spot prices in New York Harbor exceeding $7.30 per gallon on Monday, more than double the seasonal average, according to Refinitiv Eikon data with buyers anticipating a worsening shortage as supply dwindles amid sanctions on Russian energy exports. On Wednesday, it traded at $6.84 per gallon.

The Transportation Department said on Wednesday that in February U.S. airlines used 1.14 billion gallons of fuel, 5.4% less fuel than in January 2022 and 11.4% less than in pre-pandemic February 2019.

The cost per gallon of fuel in February 2022 ($2.60) was up 24 cents (10.2%) from January 2022 and up 70 cents (31.3%) from February 2019 -- the highest since October 2014’s $2.68, the department said.

Reporting by David Shepardson, Editing by Franklin Paul and Sandra Maler

Our Standards: The Thomson Reuters Trust Principles.