Rising fuel costs are wreaking havoc on commercial airlines and the US Air Force, highlighting the entire system’s dependence on cheap raw materials.

The price of crude oil has doubled in the past year and the price of jet fuel has tripled in the past 10, placing unprecedented pressure on airlines of all types.

“The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel and certainly not when record fuel expenses are coupled with a weak US economy,” said Gerard Arpey, CEO of AMR Corp., owner of American Airlines. “The industry will not and cannot continue in its current state.”

American Airlines recently announced that to cope with increasing fuel costs, it will be reducing its domestic capacity by more than 10 percent, cutting thousands of jobs and retiring old planes, and charging passengers $15 for the first item of checked luggage. It also increased a variety of other service fees by $5 to $50 each.

It is the first airline to charge for checked bags, but others are considering imitating the move. Seven small carrier airlines have gone out of business or declared bankruptcy in the US in the last year.

Fuel accounts for roughly half the costs of operating an airline. A recent congressional report noted that fuel use from flight delays alone may cost US airlines $2 billion in fiscal year 2008, up from $1.6 billion (and 740 million gallons of fuel) in fiscal 2007.

In the same week, the Air Force announced that a $10/barrel increase in oil prices increases the agency’s operating costs by $610 million per year.

“We are very concerned about the instability in oil prices because it wreaks havoc on how we manage our flying-hour program across the Air Force,” said Air Force Secretary Michael Wynne.

The Air Force spends $6 billion per year on jet fuel, more than twice what it spent before the start of the Afghanistan war.

It’s important to note that the entire system is highly dependent on air travel, both to sustain globalized trade and to enable First World countries to steal poor countries’ resources by means of military air superiority.