Tag Archives: oil speculation

Controversy over oil speculation heats up again

I can’t believe it’s been nearly four years since we’ve held a discussion on Water Ways about how commodities markets may affect the price of gasoline at the pump.

I guess I’ve been watching and waiting for something to happen. Well, a couple weeks ago, Washington Sen. Maria Cantwell began stirring the pot again.

Here’s what she said during a March 29 hearing of the Senate Energy and Natural Resources Committee:

“I definitely believe that we should get these asset class investors out of this market. Saying that we are going to allow a bunch of investors to treat the commodities market like they want to treat the rest of Wall Street from a securities and investment perspective I think is the wrong idea for commodities, something particularly as vital as gasoline.”

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Financial meltdowns, oil speculation and politics

I don’t know about you, but I find this week’s financial turmoil and efforts to prevent a meltdown of the U.S. economy to be scary, yet somehow fascinating.

It’s hard to understand some of the complexities, but it’s clear that the government had to step in, at least on some fronts, such as preventing a run on money market mutual funds, where a lot of average people have their cash stashed right now.

I’ve been somewhat focused on the question of whether speculation in the oil futures market may be responsible for the wild swings in oil prices. It’s an important environmental issue, because high prices stir up people to demand that their government open areas to oil drilling without a lot of thought about where or when.

On Tuesday, I went onto my computer to cover a hearing before the Senate Energy and Natural Resources Committee. See the story I wrote about that hearing.

The committee includes senators with widely divergent viewpoints on the topic of oil speculation, and six witnesses were equally split about whether excessive speculation drove up prices and whether market manipulation may have taken place.

Nobody during the hearing accused anybody of illegal manipulation during the price swings this year, but almost everybody agreed that rules requiring more public disclosure could be helpful.

If you are interested in this issue, I urge you to click over to the hearing and watch it for yourself. It’s quite interesting to see the discussion. Go the the Committee’s Web Page and click on “View Archive Webcast.”

I would be interested to know if anyone received the e-mail notification I sent Tuesday morning in time to watch the hearing live (for those who have signed up for e-mail notification). If you don’t wish to comment on this entry, please send me an e-mail to cdunagan@kitsapsun.com.

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Learning the ins and outs of oil speculation

I recently asked readers of Watching Our Water Ways to refer me to books or magazine articles that would help me understand oil speculation. While I don’t want this blog to turn into “watching our oil ways,” I became interested in oil speculation while writing a story about offshore drilling and have been interested ever since.

The subject of oil speculation was brought out of the closet by Congress, and U.S. Rep. Jay Inslee told me that he became convinced during recent hearings that speculation is a major force driving up the price of oil. It appears a growing number of people agree with this assessment.

A lot of my questions about markets were answered last week in a press packet released in conjunction with a new campaign by the Air Transport Association, which wants to get oil speculation under control.

Check out:

The news release by the ATA,

A new Web site, Stop Oil Speculation, Now,

The press packet (PDF 684 kb), which includes loads of questions and answers, lists of officials and companies involved in the campaign, quotes from outside experts and congressional testimony,

And the video of the press conference announcing the campaign.

The organization, of course, is speaking from a position of self interest, but some airline officials are saying officials in the Bush administration don’t seem to understand how markets work and how speculation is driving up the price of oil.

The industry group is calling for what Inslee, Sen. Maria Cantwell of Washington and other lawmakers have said are needed restrictions on the commodities and futures markets. Unless you know a lot more about commodities than I did before getting into this issue, you may find that information in the press packet is a lot of help. Here are the basic actions being requested:

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