US airlines and transportation organizations launch campaign against oil speculation

Chiefs of the 12 largest US passenger airlines and the US Air Transport Assn (ATA) have issued an open letter to customers asking them to help control what they say is rampant speculation in oil futures which is contributing to current record fuel prices. In an "open letter to all airline customers"  the CEOs have asked them to urge the Congress to tighten regulation of the oil futures market. The move may be seen as a desperate attempt by a tottering US airline industry to try and haul itself back from the brink of disaster.

According to the letter, "Twenty years ago, 21% of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66% of all oil futures contracts and that reflects just the transactions that are known. . .Some market experts estimate that current prices reflect as much as $30-$60 per barrel in unnecessary speculative costs."

The airlines, along with other transportation-related organizations, have formed a coalition, Stop Oil Speculation Now.
ATA president and CEO, James May, and other members of the coalition are scheduled to hold a briefing in Washington where they will announce "commonsense solutions for immediately reducing record-high oil prices."

The Bush Administration has given a cool reception to the campaign, however. The Department of Transport general counsel, DJ Gribbin, said that their investigations have led to the conclusion that the current level of speculation is "not unusual at all."

The price of oil, said Gribbin, is driven by "a significant increase in demand, primarily in Asia. . .We haven't seen evidence that speculating is the primary driver."