Stock Market/Oil Price Two-Step

The new economic Siamese twins, namely the stock market and oil prices, are continuing to rise in lockstep, bringing relief and pain to consumers — and the national economy — simultaneously.

Both stock and diesel prices reached yearly highs last week, as crude oil moved near $71 a barrel. The average cost of a gallon of diesel was $2.625 in last week’s Department of Energy survey, after rising 7.5 cents from the previous week.

Diesel now has risen for three consecutive weeks, swelling by 12.9 cents a gallon over that span.

Prices are up even though diesel demand still is at notably low levels. Freight is so slow that fleets aren’t buying much fuel these days.

This is additional evidence that commodities speculators are driving the price of all petroleum products skyward, believing that the worst of the world’s economic recession is over so fuel demand is sure to rise.

These speculators never intend to use the petroleum they are bidding on. They are trafficking in oil futures, and their only goal is to turn a profit by buying and selling those contracts. Their efforts drive up the cost of virtually all products for the rest of us and especially for trucking fleets, which, in normal circumstances, burn a billion gallons of diesel and gasoline every week.

It is time for the federal government to step in and control excessive speculation in petroleum markets and reduce the price whiplash speculators have caused.

We have urged the Commodity Futures Trading Commission to establish position limits on energy contracts across all trading platforms in the country.

The CFTC has taken some tentative steps in the right direction. But more must be done, and quickly.

Up to now, the commodities markets have had the authority to set the rules for future contracts. Clearly, their efforts have not prevented petroleum prices from behaving like a yo-yo. Being whipped up and down on a speculator’s string has severely damaged trucking.

While we believe that some speculation is proper and necessary, we also definitely agree with the statement of one witness at a recent congressional hearing that futures markets weren’t “intended to be a substitute for a gambling casino for Wall Street banks, hedge funds, sovereign funds and index funds.”

The CFTC must act to control this excessive gambling with our economic well-being.