So, it turns out that greedy speculators in oil futures may have been behind the spike to record-high oil prices in 2008, after all.
Just recently, the U.S.'s Commodies Futures Trading Commission declared that market supply and demand shape the price of oil - and gasoline - and the role of speculators in driving oil to $147 U.S. a barrel last July was overblown. But the Wall Street Journal reports today that speculators actually did it. Details will be revealed in an CFTC report next month, the Journal story said.
Airlines and aviation-industry groups such as the Air Transport Association (www.airlines.org) have been complaining for some months that the laws of supply and demand are repealed when the hustlers pile into the market.
The upshot for travelers when oil prices shoot up is reduced airline service, pared-back amenities, smaller and fewer planes and other inconveniences, as airlines - hurt in no small part by the high price of jet fuel made from oil - cut back their operations to contain their costs.
The critics may finally get some satisfaction.
The New York Times reports today that new CFTC chairman Gary Gensler, a Democrat, plans to be a more-active regulator than his Republican predecessor and quotes Gensler saying that the commission will have to seriously consider tightening regulation of individual speculators, to cap their market share and thereby limit their power.
It can't come soon enough for carriers like Delta Air Lines, the world's largest airline by passenger traffic, which describes itself as the world's largest consumer of oil after the U.S. government.
Testifying on behalf of Delta and the ATA at a CTFC hearing in Washington, D.C. on Tuesday, Delta senior vice president and general counsel Ben Hirst made some trenchant observations. Here are snippets from Hirst's testimony:
"In 2008 alone, U.S. airlines spent $16 billion more on fuel than they did the year before, despite the fact that we decreased our fuel consumption by more than 5 percent.''
"The speculative oil price bubble that began in mid-2007 cost Delta $8.4 billion in fuel expenses and hedge losses, compared with what we would have spent on jet fuel if the price of oil had remained at $60 a barrel. In addition, it forced us to reduce capacity by 10 percent and eliminate 10,000 jobs.''
"We strongly support strengthened regulation of the oil (speculation) industry.''
That day may be coming, and could arrive before the end of 2009.