The CEO of British Airways was on CNBC this morning talking about the new terminal they’re building for $30 million at JFK. It will be state of the art- where they’ll be able to “pamper” their most affluent travelers.

He was asked about oil prices and what that meant for ticket prices and he didn’t mince words.

Ticket prices will be going up.

How much?

British Airways hedges about 85% of its fuel costs. And even with the hedging, their fuel costs will rise from $4 billion to $6 billion this year. What’s a company to do except raise prices sharply.

Many of them are also going to cut routes because flying the planes are unprofitable. So if you live in, say, Des Moines or Rapid City, you’ll pay even more for fares because there will be far fewer planes serving those routes.

I just looked up a round trip ticket from San Francisco to Newark on United Airlines for mid-July. It’s priced at $414 round trip. That’s not bad at all. That’s what you would have paid a year or two ago (that’s a non-stop flight in the middle of the day.)

But to go from Portland, Oregon to Newark, which is a less serviced airport than San Francisco, it will cost you $665 on United (there might be another airline that would be cheaper.)

Remember when you could just fly somewhere for the weekend for $200? Those days will soon be gone. It might cost you $400 or $450 now.

For a family of five to fly, it could cost over $2000 just for the tickets alone.

Return of the road trip?

We may see more families and vacationers turning to the mini-van, even WITH the high gasoline prices. Local resorts could benefit. Las Vegas and other destinations, where you would normally fly to, are already feeling the pinch.

It’s only going to get more expensive.

The era of “cheap” air fares is over.

Much was made over the past few days about Saudi Arabia unilaterally increasing daily production by about 300,000 barrels starting in June. It’s an increase in their production of 3.3%. (This increase was made outside of the OPEC umbrella.)

Did the crude market celebrate?

The newspapers and media made it seem like this was the answer to our prayers.

But the Saudis are but a bit player now in the global energy market. And I don’t mean that in production- as they are still a huge producer. In June they’ll make 9.45 million barrels a day. Worldwide usage is just over 80 million barrels a day.

But the 300,000 barrels is almost laughable.

Watch Nigeria

For the past month, Nigeria, which produces about 3 million barrels a day, has had nearly half of its production off-line for a variety of reasons.

First, there was a strike at one of Exxon’s facilities that processes about 800,000 barrels a day (since resolved.)

And then you have the Rebels, who have been active in blowing up various pipelines, taking hostages on ships, and otherwise disrupting production. This group of armed men have been more successful at pushing up world oil prices than any other terrorist group (al-Qaeda included) or oil producing country.

The United States media has barely covered the Nigerian Rebels. But the rest of the world’s media hasn’t turned a blind eye to what is going on in that country and its impact on the energy markets. From the London Times in early May:

A Nigerian rebel stands guard after a Royal Dutch Shell base was bombed in the state of Bayelsa at the weekend. Attacks by the Movement for the Emancipation of the Niger Delta have raised the price of oil to a record $122 (£62) a barrel.

The Niger Delta rebels said they would stop attacks on the oil industry if the Nigerian Government would allow Jimmy Carter, the former US President, to act as a mediator in the conflict. The rebels, whose campaign of violence has cut output in the largest African oil producer by about a fifth, asked Mr Carter to act as a negotiator earlier this year. “We are ready to call off all hostilities and hold a temporary ceasefire in honour of President Carter should the Nigerian Government accept,” the rebels said in an e-mailed statement.

John Stremlau, the vice-president for peace programmes at the Carter Centre, said that Mr Carter would take such a request from all parties seriously but it was “woefully premature to suggest he will plunge himself into mediating this conflict”.

They have rifles, pipe bombs and whatever else. And they are causing damage to America’s fifth largest oil importer. (American refineries love Nigeria’s light sweet crude, which can be more easily refined into gasoline.)

So forget about the Saudis. They are old news. People better start paying attention to what is happening in Nigeria. The longer some of their production stays off line, the tighter world supplies.

And believe me, the Rebels know it.

I’ve talked about the copper thefts in the past. Now, there is a wave of thefts appearing in Chicago.

I’m not surprised. There are hundreds of abandoned homes on the south side of the city- all with some form of copper. The Mayor has proposed legislation that would require foreclosed properties to be boarded up with steel plates to protect the property.

You can forget about any copper gutters still being around. Same with the air conditioning units.

But even in homes that aren’t foreclosed, there are reports nearly weekly of burglaries where the appliances and the air conditioning unit is stolen. You can hear the thieves now: “No, don’t take that laptop. Grab the washing machine.”

How lucrative is it?

On the northside of the city, in Lakeview, a few “smart” thieves have been dressing up in “official looking” uniforms, driving a van, and stealing copper wire in the City’s streetlights. What they do is break into the base of the light, attach something to the end of the wire and simply drive down the street until the wire, about 9 feet long, is pulled out of the lightpole.

One light fixture yields copper worth about $2500.

One night last month, thieves hit two lights in one night. That’s $5000. Not bad for a few hours work.

Recently, thieves tried to steal more copper from a closed hospital in Edgewater. The police actually nabbed one of those guys.

But it isn’t only copper. Thieves recently stole plaques out of Oz Park in Lincoln Park. From the Chicago Tribune:

At approximately 1:45 on the afternoon of Thursday, April 10, Judy Johanson noticed that a crime had been perpetrated on the mean streets of Chicago’s Near North Side.

The plaque was gone from Oz Park’s Cowardly Lion.

While driving past the corner of Dickens and Larrabee, the aforementioned citizen remarked that the perp or perps had unbolted and absconded with a $2,000 piece of bronze bearing the names of the Cowardly Lion’s sculptor and benefactors.

This was not the first time Johanson had uncovered foul play at the park. Four weeks ago, in the garden where she prunes flowerbeds, she detected another heist: Thieves had ripped a similar plaque off the 7-foot bronze Scarecrow.

Yes- it has come to this.

But the metals are too expensive now.

The police - and the public - seem to laugh about these crimes. But if the thieves are taking $5k from two lightpoles in one night- someone has to replace that. And that means it’s going to come out of our pockets.

Maybe it’s not so funny after all.

You are watching history and you don’t even know it.

Nearly daily, crude oil and gasoline are hitting record highs. This is unchartered territory and hasn’t been seen in the economy for about 30 years.

How long will it sustain itself? When will the sell-off occur? How far will it fall when it finally sells off?

Who knows?

The momentum and the speculators are in the crude market now and it can run far higher than most people believe. That’s the thing with momentum- once it gets rolling it’s hard to stop.

I’ve talked in the past about how to benefit from the high crude prices- such as buying the explorers. But what about the refiners?

They are getting crushed as crude rises to these levels. They have to buy oil on the open market to refine into gasoline and even though gas prices are rising- they are not keeping up with crude prices. Which means the refiners’ margins are getting squeezed.

A few weeks ago, Valero said that it was slowing refining at its Midwest refinery because it “wouldn’t lose money for its shareholders.” What is it doing now? It’s losing money.

Refiners Are Switching to Diesel

The WSJ recently talked about how refiners were switching to refining more diesel fuel because diesel prices are higher and their margins are greater. This will also put a squeeze on regular gasoline inventories- which should push prices higher for gasoline.

That’s the point that is being lost here. As crude goes to these levels and the refiners continue to lose money- they will simply slow refining until gasoline prices rise enough for them to make money.

The refining stocks have been crushed in recent weeks. Several of them posted awful first quarter earnings- seeing earnings drop as much as 90%. The second quarter could be worse.

But the refiners could be a buying opportunity shortly. The squeeze on margins isn’t going to last forever. The rise in crude will moderate and prices will come down. But it’s likely gasoline prices will not- simply because the refiners will control supply to keep prices elevated so they can make some money. As the refining stocks get cheaper- they’ll become pretty juicy.

The largest free-standing refiner in America? Valero (VLO).

As crude prices rise and gasoline spikes, don’t just get mad…make money.

[The author of this article doesn’t own Valero. Not yet anyway.]