photo by Matt Hansa
A couple of days ago we wrote about how the Internataional Energy Agency believes how it is wrong to blame speculators for the current high oil prices. Based on an email titled "An Open Letter to all Airline Customers" apparently the CEOs of twelve U.S. airlines didn't get the memo.
You may have gotten the same email as I did from Delta Airlines, but for those you didn't here are the choice parts:
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.
The email goes on to say that "The nation needs to pull together to reform the oil markets and solve this growing problem [of oil speculation]."
Perhaps these airline executives need to hear the advice of the IEA: "...Often it is a case of political expediency to find a scapegoat for higher prices rather than undertake serious analysis of perhaps difficult decisions."
In addition to Delta, the CEOs of American Airlines, Alaska Airlines, JetBlue, Hawaiian Airlines, AirTran, Midwest, Continental, Southwest, US Airways, Northwest, and United Airlines all signed the letter.