By Mark Huffman
ConsumerAffairs.com
July 10, 2008
The oil-speculation issue was beginning to grow legs until a couple of weeks ago. Then various economists and business leaders spoke up to denounce the idea of blaming oil speculators for the dramatic run-up in oil prices as just plain loony.
But the issue hasn't died.
Now, the CEOs of 12 major U.S. airlines have signed an open letter to consumers that appears on the Web site StopOilSpeculationNow.com. In the letter, the business executives maintain that normal market forces are only partly to blame for high fuel prices.
"There is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation," the letter says.
Noting that 20 years ago, only 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. But today oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known.
"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," the CEOs said. "Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs."
As a result of the high prices, the executives say their industry is losing thousands of jobs and is being forced to make severe reductions in service. They urge consumers to contact members of Congress, urging them to rein in commodities speculation.
The letter was signed by the CEOs of AirTran Airways, Alaska Airlines, Inc., American Airlines, Inc., Continental Airlines, Inc., Delta Air Lines, Inc., Hawaiian Airlines, Inc., JetBlue Airways Corporation, Midwest Airlines, Northwest Airlines, Inc., Southwest Airlines, United Airlines, and US Airways.
