This blog has often commented on the complex and far reaching challenges to global supply chain movements brought on by today’s unprecedented high prices for energy. Many in the community are also frequent airline flyers, and thus it was quite interesting to receive an open letter to all airline customers this week, seeking support to reform speculation in today’s oil markets. The letter points out that while twenty years ago, 21 percent of oil contracts were purchased by speculators, today that number is estimated to be 66 per percent. The letter further points out that in today’s oil markets, a barrel of oil may trade 20-plus times before delivery and use, and that some market experts estimate that current prices reflect as much as $30 to $60 per barrel is unnecessary speculative costs. Market speculation loopholes that originated in the Enron saga still exists in today’s commodities markets.
The fact that the CEO’s of twelve different airlines can come together on a singular view is adequate evidence of the magnitude of this issue related to future air travel. The overall impact of speculation in oil markets extends far beyond air travel, impacting all major areas of transportation, production, and logistical movements. This author also shares outrage over the ability of certain speculators to have a far reaching impact on global supply chains and global economies. I strongly urge Supply Chain Matters readers to gain more education and insight as to the reality of speculation in oil markets, and what really needs to occur to reform these markets. Add your loud voice to your Congressmen, Senators, and other influential leaders. Visit the Stop Oil Speculation and other web sites and add your voice.