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Rise in Oil Price Matched by Rise in Finger Pointing
July 07, 2008 08:00 AM
As oil prices hit an all-time high, critics and pols look for someone to blame.
30-Second Summary
With oil reaching $145 per barrel just before the Fourth of July weekend, political leaders from Washington to Moscow are looking for a way to explain how prices have risen so steeply in recent months.
A number of bills recently introduced in Congress have pointed to the role of speculators and market traders, though those accused are just as quick to accuse political leaders of not fully understanding how the energy market functions.
The New York Times reports that whoever is to blame for the current crisis, the rise in oil prices could have been avoided; the article suggests that most of the responsibility lies with Congressional inaction and the powerful influence of the automaking industry.
“Much of what we’re seeing today could have been prevented or ameliorated had we chosen to act differently,” says Pete V. Domenici, a Republican member of the Senate Energy and Natural Resources Committee. “It was a bipartisan failure to act.”
Currently, Congress is responding to the oil price hike by going after oil speculators; some argue that doing so will do nothing to solve the problem, and may even exacerbate it.
A number of bills recently introduced in Congress have pointed to the role of speculators and market traders, though those accused are just as quick to accuse political leaders of not fully understanding how the energy market functions.
The New York Times reports that whoever is to blame for the current crisis, the rise in oil prices could have been avoided; the article suggests that most of the responsibility lies with Congressional inaction and the powerful influence of the automaking industry.
“Much of what we’re seeing today could have been prevented or ameliorated had we chosen to act differently,” says Pete V. Domenici, a Republican member of the Senate Energy and Natural Resources Committee. “It was a bipartisan failure to act.”
Currently, Congress is responding to the oil price hike by going after oil speculators; some argue that doing so will do nothing to solve the problem, and may even exacerbate it.
Headline Links: Who's to Blame for the Oil Price Hike?
The New York Times interviewed energy policy experts on the crisis, many of whom argued that while there are multiple factors in the spike in oil prices, most of the responsibility lies with Congressional inaction over the past 25 years. The article cites several Congressional leaders who admit the current crisis could have been avoided.
Source: The New York Times
Reuters UK offers a variety of opinions about who to blame for the oil price hike, including speculators, the weak dollar, the U.S. and British “addiction to oil” and increasing demand in Asia.
Source: Reuters UK
Background Links: High Oil Prices, High Demand, High Concern
The increase in oil prices has increased investor doubt on Wall Street in recent weeks, as it becomes the largest obstacle to overall growth and corporate profits. A weakened dollar, reduced reserves and tensions between Israel and oil-rich Iran are only serving to increase market insecurity.
Source: Reuters
While some have pointed to conservation in the United States as a means to reducing oil prices, it appears that drop in demand will be countered by increasing demand in developing nations in Asia, Latin America and the Middle East.
Source: International Herald Tribune
Opinion & Analysis: Don't Reduce Speculation; Reduce Oil Dependence
The Economist opines that the recent spate of bills attempting to regulate the role of oil speculators and traders is simply an attempt to find a scapegoat for rising oil prices. The magazine argues that oil speculators actually perform a “vital service,” and that going after them will actually cause prices to go even higher.
Source: The Economist
Gal Luft of the Washington Post points squarely at U.S. consumption to explain high oil prices, arguing that energy independence is the only viable solution. Luft cites previous efforts to wean the country off of oil-based energy as an example to follow for the U.S. auto market
Source: The Washington Post
Reference Material: Fuel Price Statistics
Crude oil, and consequently, gas prices, have seen a dramatic increase in recent months. The Energy Information Administration charts the rise in gas and diesel fuel prices over the past year.
Source: The Energy Information Administration
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