Posted on: 19 April 2010 by Ross McSweeny
AirTran Airways is publicly supporting proposed legislation introduced by US Senator Blanche Lincoln (a Democrat representing Arkansas) to “limit excessive speculation in the oil markets and put Main Street’s interests ahead of Wall Street’s”.
The airline commented in a statement, “Wall Street traders artificially drive up prices of heating oil, gasoline, diesel, and jet fuel through unchecked speculation in ways not associated with regular supply and demand fundamentals in order to reap billions of dollars of financial rewards. These traders have absolutely no plans of ever taking delivery of these products. At the same time, the American consumer is negatively impacted by this unnatural volatility and is forced to pay higher prices for these commodities as well as goods and services in associated industries, including air travel.”
Speaking at a Washington DC press conference on the issue, AirTran’s chairman, president and CEO Bob Fornaro remarked, "The rampant and unregulated speculation in this commodity has crippled and handicapped the US airline industry while severely impacting the US consumer. We need to let supply and demand determine what consumers pay, not speculators in an unregulated environment."
To illustrate the impact of these “unnatural forces” on the market is the price of crude oil, the airline emphasised that while global demand for oil is down and production is significantly up, the closing price of a barrel of crude oil was $81.45 on 20 April – 75% higher than the price one year previously.
James May, president and CEO of the Air Transport Association (ATA) joined in the condemnation of speculators. "If we do not control the fuel price spikes and volatility, our nation’s economic recovery will stall," he remarked.
Like Fornaro, May pointed to figures highlighting the result of the problem. "In 2008, we used the same amount of fuel as we did in 2003 – but it cost us $42 billion more," he declared. "Senator Lincoln’s bill will make the financial and energy markets more transparent and stable, help prevent manipulation and unacceptable risk-taking.”