12 Airline CEOs Say Oil Speculators Have Driven Up the Price of Oil

AN OPEN LETTER TO ALL AIRLINE CUSTOMERS

From 12 Airline CEOs

Hello ___________________,                                                         

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.

Richard Anderson
CEO
Delta Air Lines, Inc.

Gerard J. Arpey
Chairman, President and CEO
American Airlines, Inc.

Bill Ayer
Chairman, President and CEO
Alaska Airlines, Inc

Dave Barger
CEO
JetBlue Airways Corporation

Mark B. Dunkerley
President and CEO
Hawaiian Airlines, Inc

Robert Fornaro
Chairman, President and CEO
AirTran Airways

Timothy E. Hoeksema
Chairman, President and CEO
Midwest Airlines

Lawrence W. Kellner
Chairman and CEO
Continental Airlines, Inc.

Gary Kelly
Chairman and CEO
Southwest Airlines Co. 

Douglas Parker
Chairman and CEO
US Airways Group, Inc.

Douglas M. Steenland
President and CEO
Northwest Airlines, Inc

Glenn F. Tilton
Chairman, President and CEO
United Airlines, Inc.

_________________________________________________________

The e-mail/letter provided by the Stop Oil Speculation website  

High prices for energy are hurting me and my family and I strongly urge Congress to act immediately to lower costs for all Americans.

Rampant speculation in the commodities futures market is driving up prices out of proportion to marketplace demands. The problem is speculators are increasingly buying and selling commodities such as oil even though they have no intention of using the product. The unregulated speculators are pocketing billions of dollars at our expense. The cost of food has gone up, the price at the pump has gone way up, and I’m already concerned about how much more it will cost to heat my home this winter. 

To lower oil prices for all Americans we need to increase domestic supply, exploration, alternative energy sources and conservation. We also must protect bona fide speculation and hedging.

To address excessive speculation, Congress should promptly take the following actions:

1. Re-establish strict position limits on energy commodities – Position limits have existed since 1936 and work well at curtailing excessive speculation. Any trader that is not hedging with the intention of taking physical delivery of a related commodity must be subject to strict position limits in all contract months.

2. Close the London Loophole – Foreign Boards of Trade with U.S. Terminals trading futures contracts that cash-settle against U.S. contracts should face the exact same regulations as U.S. exchanges. It is not fair for U.S. futures exchanges to face more regulation than their foreign counterparts trading in U.S. commodities.

3. Regulate “swaps trades” – All trades in the over-the-counter (OTC) swaps market must be subject to strict position limits. It is unfair to exempt swaps dealers from the same regulations that other market participants face. Experts have estimated the size of the OTC markets as nine or ten times larger than the futures markets.

4. Fully close the “Enron loophole” – “Exempt Commercial Markets” that trade U.S. contracts and which are nearly identical to fully regulated contracts, should no longer be exempt from the same regulations that apply to Designated Commercial Markets such as the NYMEX.

5. Bring transparency to all energy trading – Positions of traders in all markets should be reported to the Commodity Futures Trading Commission (CFTC) and should be properly categorized based on where the trades occur and who is doing the trading. This will provide vital information that can be used to detect and prevent market manipulation.

Thank you for listening to my concerns. By adopting these common-sense solutions, Congress can dramatically reduce the price of oil and gas, providing immediate relief for businesses and families like mine.

To send this message (you can personalize the message) to your Senators and Congressman:

http://capwiz.com/sosnow/mailapp/