Jeanne Shaheen is wrong to assign blame for high oil prices on “excessive speculation”
Futures trading has intensified the upward price trend, but market fundamentals have caused it. Large-scale speculation is not occurring, as daily trading volume indicates.
One gets the impression that the purpose of Shaheen’s article was to apply the word “Enron” somewhere, which of course, she manages to do. Let’s get back to reality, though. There are four primary factors driving oil prices today:
Supply: World production has been flat for two years, while the US has not built a new refinery since 1976 and Congress has prevented drilling by US companies in our own territory or offshore waters.
Demand: World demand continues to grow, particularly from emerging markets in China and India.
Monetary Policy and Regulation: The Fed’s weak dollar policy has notably increased the price of oil imports. Environmental mandates have forced refiners to inefficiently create numerous regional gasoline blends, resulting in unnecessary production and transportation costs.
Political Risk: The Middle East, and now Venezuela are highly unstable.
The last thing we need is Congress imposing more regulation and control. To the contrary: they need to get out of the way.
Andrew Kone is a member of the Bedford Republican Committee.