By Bob Rice - 10/13/08 02:15 PM EDT
Dear members of Congress:
For the past 31 years, my wife and I have owned and operated Sav-on Plants retail locations in the Atlanta metro area. For the first time we are now faced with the prospect of having to lay off an employee.
So it is with disappointment and frustration that I view your apparent unwillingness to deal with a major contributing factor of the unprecedented financial crisis — namely, high gas prices.
An immediate, dramatic and ongoing decline in crude oil and gasoline prices would instantly increase the profits of tens of millions of businesses worldwide, while simultaneously increasing the disposable income of hundreds of millions of potential customers.
Significantly, Congress could almost certainly bring down the price of fuel immediately and dramatically if you seriously confront speculators in the crude oil futures market, a market that determines the daily worldwide price of crude oil, which then quickly impacts fuel prices worldwide.
Some experts claim that such speculators do not affect crude oil futures prices. However, other experts feel that the run-up in crude oil prices in recent years, and particularly during the past year, was not the result of a shortage of crude oil supplies, but rather, the result of speculative buyers overwhelming the number of sellers, and thus driving up the price.
The mere possibility that these speculators have forced Americans to pay perhaps twice as much for fuel during recent years surely demands that you in Congress do something to find out which group of experts is correct.
To date, Congress has only considered ways to possibly limit or better regulate such speculation. However, limiting speculation will take time and is likely to produce difficult-to-regulate gray areas, which speculators might take advantage of.
My suggestion is a complete ban, at least temporarily. The U.S. government, working when possible with foreign governments, should make it expressly illegal for speculators to purchase crude oil futures contracts. Then sit back and see what happens to the price of crude oil; see which group of experts is correct. (This ban, of course, would not affect traditional buyers, who are willing to accept delivery of crude oil.)
The upside potential of such congressional action is huge. The price of crude oil could conceivably fall to as low as $30 per barrel, resulting in gas coming back down to a buck a gallon.