If you saw the presidential debate last Tuesday, you saw very little effective rhetoric on the problem of high fuel prices, and aside from some bickering over what exactly has happened in the area of drilling on federal lands in the past four years, little disagreement at the heart of what’s to be done about high fuel. (If you missed the exchange in responses a question about the government’s role in fuel prices, find CBS video of it here.) As I listened to the non-answers from Obama and Romney, as well as both candidates’ determination to get to American energy independence in the near term (with negligibly different paths toward that, in essence), I didn’t hear much in the way of real dedication to the current price issue.
What I heard was more akin to a couple guys doing the verbal equivalent of the old shoulder shrug, hands out to the side, palms up.
Such anemic dancing around the problem is not good news for owner-operators in the here and now — fuel prices continue to plague many businesses. (Regular readers will recall that high diesel ranked No. 1 in our polling on top owner-operator business challenges; read this story and this story for more on potential solutions.)
Obama attempted an 8th-grade economics-class-level explanation of the world oil market (worldwide demand skyrocketing, putting pressures on prices at home) even as his administration’s Commodities Futures Trading Commission follows up on his own avowed concern about an excessive speculative premium in fuel prices due to the way commodities futures markets work today, a problem I’ve written about time and time and again. There’s something the government can do about fuel prices, and it went unmentioned.
There’s some recent news — perhaps hopeful, but likely not — on that score, too. New commodity market speculators’ positions limits for large traders, which some say is the answer to the problem of excessive commodities speculation, in the process of implementation have been delivered a blow by a U.S. court. The Commodity Futures Trading Commission, in the face of the blow, however, determined to press forward with their rule, scheduled for implementation quite soon.
All in all, what’s going on there sounds quite similar to the Owner-Operator Independent Drivers Association’s challenge to the limited mandate for electronic logging devices, thrown out by a judge given the Federal Motor Carrier Safety Administration’s failure to consider the issue of driver harrassment. (As you know, the regulator in that case, our friends at the FMCSA, actually upped the ante in the face of the court ruling, going after an industry-wide electronic-log mandate, with the support of Congress.) Regarding the positions-limits rule, wrote Jack Farchy and Javier Blas at FT.com, “Robert Wilkins, a U.S district judge in Washington, ruled that the CFTC had failed to heed instructions from Congress requiring it to determine that its rule was ‘necessary to diminish, eliminate or prevent’ excessive speculation,” as specified in the Dodd-Frank financial legislation.
While it’s now unclear whether this potential deterrent for excess speculation in oil markets will ever see the light of day, you can read more about the CFTC’s determination to move forward on positions limits in this FT.com story.
FMCSA spoke of its timeline to introduce an EOBR mandate rule early next year at the Motor Carrier Safety Advisory Committee meeting I attended in late August. There, OOIDA Executive Vice President Todd Spencer was careful to note to the full committee the unpredictability of such timelines, that there are “things that can happen along the way,” as he put it. I asked him afterward whether the association had further action planned on electronic logs. He said simply that in his view FMCSA hadn’t satisfied the court’s direction.
For the CFTC, the court ruling likely opens the door for further finance-industry efforts to stop and/or delay the position-limits rule as it moves toward implementation, as I read it, just as is the case with OOIDA’s ongoing opposition to the EOBR mandate.
In the end, there’s probably a good reason Mr. Obama didn’t bring up the effect of speculation on the price of fuel at the pump in the debate: His administration hasn’t been able to get anything done on the problem, in spite of the Dodd-Frank legislation, and the track toward addressing it looks replete with big obstacles. Romney, if elected, I don’t imagine would fare any better.
One potential relief is the somewhat new abundance of domestic natural gas (check out my story on hauling opportunities around new wells and our series on heavy duty natural gas engines), which Obama wanted to take some credit for and Romney for obvious reasons touts as a success of American industry. The expedited operator I profiled last week, Don Lanier, among others has expressed a keen interest in the potential of the fuel. Lanier is actively evaluating a potential buy of a straight truck for the expediting segment powered by natural gas, maybe as early as next year. “It really depends on the fuel network,” Lanier said, “how much it’s coming along. The natural gas truck is really appealing, if diesel keeps on going up and up and up. And I think it’s going to. The gamblers want to strangle us all out of business, and what impetus do they have to stop as long as they’re making big money on it.”