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letter from the airlines on oil

Discussion in 'Organic Lawn Care' started by ICT Bill, Jul 9, 2008.

  1. ICT Bill

    ICT Bill LawnSite Platinum Member
    Posts: 4,115

    I just received this from airtran airlines, I have never seen anything like this before come from any kind of large company

    An Open Letter to All Airline Customers
    Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now. For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers.

    Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.
    Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known.

    Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.
    Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.

    The nation needs to pull together to reform the oil markets and solve this growing problem.
    We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com/sos.
  2. jeffinsgf

    jeffinsgf LawnSite Senior Member
    Posts: 641

    The Securities and Exchange Commission used to be a watchdog, keeping an eye on big business to make sure its power was not abused at the expense of individuals and small businesses. It seems that lately they have turned a blind eye to anything big business wants to do. Rampant speculation on oil and food? "That's okay." Competitors merging creating monopolistic competition? "Think outside the box, it will work." Allow (or at least not do anything about) virtually the entire manufacturing sector to move production to China? "It's a World economy now, we have to think globally".

    The worst part is, I see absolutely no way that we can reverse course. Even a president that wanted to really change (and I don't think there is one on the horizon) could not get Congress to do the right thing -- kick the PAC's out of Washington and start governing for the people, not for big business and self perpetuation.

    By the way, for all the good it will do, I visited the linked site and sent e-mails to all my Congresspeople.
  3. treegal1

    treegal1 LawnSite Gold Member
    Posts: 3,911

    its a special interest group same as any where
  4. DeepGreenLawn

    DeepGreenLawn LawnSite Silver Member
    Posts: 2,372

    Those guys must REALLY be hurting. I almost feel bad for them.
  5. quiet

    quiet LawnSite Senior Member
    Posts: 720

    Ridiculous. The commodity markets govern themselves. And just because a barrel of oil trades over 20 times before delivery doesn't mean each trade is resulting in a price increase. Traders can make money on each direction.

    Go watch "Trading Places" again if you like.

    The demand for oil drives the price. Nothing more. And "blaming someone else" is easier than addressing the real issue.
  6. JDUtah

    JDUtah LawnSite Silver Member
    from UT
    Posts: 2,636

    Do i dare say I believe it isn't even an issue, just facts of free enterprise. Acceptance is the first step to handling unfavorable circumstances?
  7. ICT Bill

    ICT Bill LawnSite Platinum Member
    Posts: 4,115

    yeah but it is a little spooky when you see the head of the SEC stand up in front of cameras and say "we need to stop the dark markets from speculating"


    Darth Vader is trading oil
  8. treegal1

    treegal1 LawnSite Gold Member
    Posts: 3,911

  9. PHS

    PHS LawnSite Senior Member
    Posts: 724

    That's true with the exception of oil. The government only allowed certain businesses into the oil futures market, like airlines etc. to keep speculation from effecting the market at large. Only compnaies that depended on a fixed oil price were allowed in. In 1999 those rules were changed. Now there's a flood of people diving into the futures markets. In 2003, the oil futures market was 'only' trading $18 billion. Last year they were trading $250-300 billion. I don't what it is now but the numbers are substantial. Anyone can get online now buy into the futures market, it's only bound to grow in the near future.

    If speculation is pushing this huge spike that's not all bad. It seems to me like it's initiating a huge wake up call as to how dependent we've become on this resource and how valuable it is. By stimulating massive conservation efforts and investing in new technologies now, that will greatly ease the transition into a reduced oil world which will happen at some point in the future.

    In think in this modern world we have to come to the realization that money can move very quickly now. It's not just simple supply and demand anymore, a product is made and a product is sold. Speculation is bigger part of the equation. The boom and bust cycle is happening much faster than it did in the past. Just look at the last 10years and how money has flowed from market to another. The dot com boom wasn't really based on anything concrete, that's why it collapsed. Investors were making money on other peoples money not products. Shortly after that collapse that money moved into housing. Within short order there was enough investor money flowing into the market the people again were making on money on other peoples money, not on a product that was actually worth what it was being traded at. The housing market craps out on an international scale and shortly thereafter now oil is going berzerk. The 'electronic herd' (if you're a Thomas Friedman fan) is moving money form one market to another. Once it reaches it's peak and the flow of money into the market starts to slow down, the big investors pull out because they know the ride is over, the card house collapses once again and off to the next market they go :).

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