David M. Ewalt
Forbes.com
08.10.04

NEW YORK - It's getting hard to claim a headline anymore for the news that oil prices have hit a record.

Crude oil futures hit $45.04 on the New York Mercantile Exchange this morning, the highest price since 1983. By midday, prices had fallen back below $45, but oil costs remain nearly 40% higher than they were the same time last year.

The proximate causes are clear: Yesterday, the forces of radical cleric Moqtada al-Sadr blew up a main pipeline that runs from Iraq's southern oil fields to the Persian Gulf. In Russia, oil giant Yukos is being dismantled by authorities, and some key assets were seized after a court rejected its appeal. Yukos shares took investors on another wild ride today, falling more than 15% in Moscow trading.

So far, however, U.S. gas prices have not returned to their late-spring highs. But how long SUV makers like Ford Motor (nyse: F - news - people ) and General Motors (nyse: GM - news - people ) will be able to bask in that good news is far from clear.

Airlines are not so lucky. Fuel costs are cutting ever deeper into the dwindling cash pile at Delta Air Lines (nyse: DAL - news - people ). British Airways (nyse: BAB - news - people ) has tripled its fuel surcharge. And Deutsche Lufthansa (otc: DLAKY - news - people ) hasn't imposed an extra fee but warned today that higher fuel costs will ground earnings.

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