By Mike Hixenbaugh
Rocky Mount Telegram

Tuesday, July 08, 2008

U.S. Rep. Bob Etheridge hopes to curb growing oil prices by cracking down on market manipulation, he told motorists Monday at a Nash County Kangaroo gas station.

Etheridge, D-2nd District, introduced legislation in the U.S. House of Representatives last month to allow stiffer regulation of energy trading. Etheridge is chairman of the Agriculture Subcommittee on General Farm Commodities and Risk Management, which oversees the Commodity Futures Trading Commission.

Etheridge, along with several market analysts, is placing much of the blame for high fuel prices on excessive speculation.

"We're gonna bring some of these speculators to the table," Etheridge told one motorist Monday. "This is long overdue."

If passed, the legislation would provide the Commodity Futures Trading Commission with more employees and overall leverage in enforcing regulations.

While acknowledging that no one factor is responsible for the growing price of oil – now at a record $145 per barrel – Etheridge said cracking down on speculators is an appropriate step.

Fully understanding why oil costs have risen so sharply can become convoluted for the average motorist, Etheridge acknowledged, but he wants residents to know Congress is taking action to combat the problem.

One factor in the price surge is rapidly growing demand in India and China, where consumers continue to buy more and more cars, University of North Carolina-Chapel Hill economics professor Stanley Black said. Although U.S. fuel consumption is down 2 percent since January, there is a higher global demand, Black said. Higher demand means higher prices.

In addition, the value of the dollar has dropped sharply compared to the euro and the yen in recent months. That essentially means that oil in dollars is worth less to sellers.

"The oil price has gone up for U.S. consumers because the value of the dollar in their pocket is less than it was before," Black said in a previous interview.

With the value of the dollar dropping, U.S. investors are rushing to invest in oil and other reliable commodities, such as gold. Those speculative investments translate to more expensive oil and higher prices at the pump, Black said.

Excessive speculation leads to profits for investors and higher oil prices.

Experts told Congress recently up to half of the recent jump in oil prices can be attributed to market manipulation and excessive speculation.

"We need to do more to control this," Etheridge said, blaming the Bush administration for allowing the market to get off track. "We don't want market manipulation on Wall Street to make it more difficult for the working folks on Main Street."

Etheridge said he also advocates higher fuel-efficiency standards, government-funded renewable energy research and limited offshore drilling.

"This legislation is not a cure-all for this growing problem," Etheridge said. "We all also need to do our part by doing as much as we can to conserve and reduce energy consumption."

John Jones, a Spring Hope man who stopped at the Nashville Kangaroo station to fill his Lincoln Town Car at $3.94 a gallon, told Etheridge he's been conserving for several months now.

"I don't drive nearly as much," Jones said, noting that he thought $2 per gallon was expensive. "I can't afford to go anywhere."

Congressional hearings on Etheridge's bill are scheduled in Washington, D.C., this week.