So I’ve been listening to the debate lately about whether rising fuel prices are being caused simply by an increase in demand from developing countries (china, india, etc.) or by something more complicated like speculation in the oil market – a la the Enron electricity fiasco in California.
Obviously John McCain, with his drill-first-ask-questions-later approach, believes it’s the first option. Or at least that’s what his campaign staff is telling him to pretend to believe.
That’s not surprising though. Republicans always eschew the answer requiring a slight bit more thinking for the answer that appeals to the gut, the answer that resonates with the simple lessons learned in grade school, the “common sense” answer.
And, in this case, “common sense” tells us that more people want oil so the price is going up.
Me? I’ve been leaning toward the other answer. But I really hadn’t decided until about an hour ago.
At 8:26:34 PM today I received an email – via my frequent flier program with Delta – signed by the CEOs of 12 Airlines, including Delta CEO Richard Anderson.
The text of that email is included below, and I encourage you to read it.
It’s non-partisan and pro-business… well, pro-airline-business at least.
But – knowing what I do about the positions of the two major candidates – it also seems to be pro-Obama.
Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.
For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers.
Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.
Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.
Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.
The nation needs to pull together to reform the oil markets and solve this growing problem.
We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.