Maine’s fuel dealers definitely understand that our customers are not happy when fuel prices rise. Neither are we.
We don’t like charging these prices any more than your grocer likes today’s high food prices. So much of this price escalation depends on decisions being made in Washington, D.C., and on Wall Street. There are three main causes for today’s prices: America’s weak dollar; U.S. energy policy discouraging oil and gas production; and rampant speculation on Wall Street.
Fuel prices today defy the law of supply and demand. Current heating oil inventories are at 27-year highs. Consumption of gasoline is down, which means demand is off, and yet crude oil prices keep moving up.
To jump-start the economy, the Federal Reserve poured trillions into the system. The more dollars added, the less each dollar is worth so prices go up accordingly – and not just for oil, but also for wheat, corn and soybeans, which are all up 90 percent. A strong U.S. dollar could bring prices down.
U.S. drilling bans can interrupt the world supply balance. Today worldwide production provides about 2 percent more than we consume. Deep-water drilling and Alaskan and Western reserves are off-limits, according to the Obama administration. The ban on deep-water drilling until 2017 has signaled to the world that the United States won’t be seriously addressing any national production goals.
The U.S. imports 51 percent of the oil we use, mostly from Canada and Mexico, as only 13 percent of U.S. imports are from the Persian Gulf area. However, as the third-largest oil producer in the world, limiting our development is resulting in a tighter balance worldwide — so pressure on prices has increased.
Uncertain oil production and a weak dollar have created a field day in the commodity markets. Add unrest in the Middle East and you have record speculation.
Hedge funds and other speculators have increased their positions in energy markets by 64 percent since June 2008 to the highest level on record, according to data released by U.S. Commodity Futures Trading Commission. June 2008 was the top of the previous speculation bubble.
What we are experiencing today is far more intense. Congress has been given authority to rein in investors who care not about what you and I pay to heat our homes or drive our cars. The billions from our pockets are going to Wall Street. It’s time for the CFTC to act with urgent measure to stop this looting of the American public.
What can we do today? There is no single solution to America’s energy challenges. We need to capitalize on our known domestic oil and natural gas supplies. We need to create an all-in energy policy with all energy sources contributing.
We need to further develop and promote pellets, liquid biofuels, clean coal, solar, wind, clean diesel, gas and nuclear energy. We also can reduce demand.
Of all the energy investments you can make, increasing the efficiency of your heating system can give you the greatest return. You can take control of your own energy future by investing in improved weatherization, high-efficiency control technology and cutting-edge heating systems. Here in Maine, fuel dealers have been spearheading conservation efforts for decades.
Since 2004, we have helped customers reduce heating oil usage in Maine by 100 million gallons. We have helped hundreds of homeowners cut their annual fuel costs by up to 50 percent through higher efficiency equipment and weatherization. We have also advanced our industry through cleaner, more renewable fuel sources such as biofuel and ultra-low-sulfur diesel.
The 12,000 Maine people in our industry want you to know that while the day-to-day price of heating and motor fuels is out of our hands, we still have some pretty smart ways to help you control the cost of home energy.
It’s crucial that Maine people contact our congressional delegation to ask them to do their part in reining in speculation, limiting the printing of dollars and developing America’s resources. In Maine, we can’t control everything, but your fuel dealers are firmly in your corner fighting to cut costs every day.
Jamie Py is president and CEO of the Maine Energy Marketers Association.