US Senator Byron Dorgan plans to introduce legislation this month to stem excessive oil speculation-a move welcomed by a bevy of US airlines that blame escalating fuel costs on speculation.
Nothing has happened with regards to supply and demand in the past 15 months to justify the current price of oil, the North Dakota politician said during the American Association of Airport Executives Energy/Air Service Summit in Washington, DC on 10 July.
While he views futures trading as essential, Dorgan blames the glut of speculators-those that trade the commodity but have no intention of using it-and passive regulators for jet fuel prices reaching a record $143 per barrel compared with $62 a year ago.
“When you’ve got excess speculation, well beyond what supply and demand can justify, regulators ought to do something about it,” Dorgan says.
“We need regulators who aren’t brain dead. We need regulators that will stand up and regulate. I believe strongly this futures market is completely broken.”
The White House, however, takes a different viewpoint.
“We don’t see that speculation is driving the cost up,” US DOT transportation secretary Mary Peters said during the summit, noting there is increasing demand for oil from countries such as India and China.
Diversifying and expanding domestic oil production and bolstering refinery capacity in the USA is needed to lower costs, she adds, noting the President has called for drilling in the outer continental shelf and the Artic National Wildlife Refuge.
Dorgan says he supports domestic drilling “in certain areas” but increasing drilling in the USA does not address escalating fuel prices in the near term.
Carriers represented by the Air Transport Association of America (ATA) have urged Senator Dick Durbin to take the lead in Congress to enact legislation that creates a more transparent system for trading oil.
Source: flightglobal.com's sister premium news site Air Transport Intelligence news
Source: Flight International