Airlines ask frequent flyers to act against oil speculation

The chief executives of a dozen U.S. airlines, all grapping with skyrocketing fuel costs that are leading to job cuts, capacity reductions and higher fees for passengers, are asking their customers to help curb rising oil prices.

The industry leaders have co-signed a letter that’s being sent to all members of their frequent flyer programs, asking them to contact their representatives in the government regarding the problems involved in market speculation, which is largely considered to be a major factor in the soaring price of oil.

“This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers,” the letter reads.

In calling for restrictions on speculative trading in oil, lawmakers have already cited the problems that these high prices are causing not only airlines, but also farmers, trucking companies, and consumers.

The chief executive of Northwest Airlines, Douglas Steenland, urged lawmakers last month to close the loopholes allowing traders to bypass speculation limits by engaging in over-the-counter transactions or doing their trading on foreign exchanges.

The airlines’ letter recognizes that the price of oil is partly due to normal market forces, and calls for the country to focus on conservation and developing alternative energy sources.

The letter also refers to the process of speculation in which traders buy large quantities of oil and then sell it to each other, over and over again. The price rises with each trade, and the consumer ends up paying for the traders’ gains. Some market experts have estimated that current oil prices include $30 to $60 per barrel in speculative costs, the letter continues.

www.nwa.com