A Congressional bill to curtail speculation in the oil market may not come up for a vote this evening because of a partisan disagreement over the number of amendments attached to the bill. Republican Senators intend to include as many as 28 amendments to the bill, including provisions that would open offshore drilling, a move opposed by Democrats.
Yesterday, the Senate voted 94 to 0 to consider the “Stop Excessive Energy Speculation Act of 2008,” but unless the Senate agrees to the number of amendments before a vote scheduled for 5:50 p.m. today, the bill would languish over the Congress’s scheduled August vacation.
“The energy futures market has been broken with unbridled speculation, and the result is oil and gas prices that are shooting up like a Roman candle,” said the bill’s sponsor, Sen. Byron Dorgan D-N.D. “We have heard from a number of energy experts who tell us that the fundamentals of supply and demand cannot justify a doubling of price in the past year. This bill will wring the excess speculation out of the market and bring some relief to consumers who are paying through the nose at the gas pump.”
But Terry Coxon, economist and senior editor at Casey Research, argues that the bill is pointless and offers this insight about the role of speculators.
“A speculator is a full-service decider,” Coxon says. “He is responsible in a way that the U.S. Senators never are. And by taking speculative positions, he provides more room for others to specialize in what they do best. The pipeline operator that wants to specialize in the purely industrial side of its business, for example, can offset the price risk of owning oil by selling futures contracts. The buyer of the futures contracts may be a speculator, who assumes the risk the pipeline operator wants to escape.”
Clearly no one like paying $4.50 per gallon, especially in the heart of the summer driving season. But please, at least until after the election, let’s hope that the Senate continues to do what it does best: nothing.