Oil speculation a big issue

I would like to respond to the editorial published Sept. 24, titled “Oil-speculation bill offers false hope.”  

I would also like to offer some suggestions to the IDS editorial board: Do research, call my office to discuss policy issues, and gather all the information.

There are many factors contributing to the skyrocketing gas prices, one of which is, inarguably, speculation on the oil commodity markets.

The deregulation of oil in 2000 created loopholes that have allowed speculators to hedge on oil. Economists – some from IU – estimate that this hedging on oil has increased the price per barrel by $20 to $50.   

My visits to both the New York and Chicago Mercantile Exchanges have confirmed that the influx of participants in the commodities futures market is raising gas prices for American consumers.  

In addition, I have met with economists from IU and the University of Maryland who have reaffirmed that oil speculation is increasing the price of gasoline.

There are a number of well-respected financial experts who support my position on oil speculation, including former Federal Reserve Chairman Alan Greenspan. Last month he stated, “Financial speculation did play a significant part in the rapid increase in oil prices.”   

Oil speculation is not an “easy scapegoat” on this issue – it is a prime contributing factor that has hurt the American consumer.  

Using a comprehensive approach, this Congress has addressed the energy issues facing our nation. We don’t want to pass foreign energy dependence on to you, the next generation.  

Instead, I want to cultivate the tools we have right here in Southern Indiana: the natural resources, the finest universities and the drive to make energy independence a reality.

Rep. Baron Hill

Editor’s Note: Alan Greenspan recently told the Financial Times that speculation was “importantly responsible” for the rapid increase in oil prices in late 2007 and early 2008.

But Greenspan also said this was “good speculation,” of the kind that moderates a change in prices, “ultimately cutting the top off the intermediate peak price.”