WASHINGTON -- The United Motorcoach and American Bus associations have joined a coalition of organizations that is urging Congress to crack down on oil speculation.

Or, to be more precise, "excessive" oil speculation.

The Stop Oil Speculation Now coalition is composed of upwards of 40 organizations, businesses, labor groups and others "united in support of responsible energy policies and prices."

The coalition, which is being spearheaded by the nations airlines and its trade organization, the Air Transport Association of America, has endorsed new legislation introduced by Senate Majority Leader Harry Reid, D-Nev.

"Millions of U.S. voters have asked Congress to act immediately to limit rampant oil speculation, which has been significantly driving up fuel prices. Congress listened. Sen. Reid and others introduced Senate Bill 3268 - Stop Excessive Speculation Act, a bill that accomplishes our most important goal of putting reasonable limits on excessive speculation," said ATA President and CEO James C. May.

"This bill is ... a good first step toward ensuring that formerly dark over-the-counter markets will now be required to do business in the sunshine and ensure that no one entity unduly controls the market."

May said the bill would create a distinction between legitimate hedgers and those who are in the market for purely speculative purposes. "This ensures that traders with no relationship to the physical product no longer can take advantage of existing loopholes," May added.

"The bill would close the Foreign Board of Trade or London loopholes by requiring transparency and limits similar to those required for trading on U.S. exchanges."

Blame game target

In the current high oil prices blame game being played in Washington and elsewhere, oil speculators have become a favorite whipping boy along with oil companies -- of politicians and others.

They are accused of driving up oil and fuel prices through speculative trading, while raking in exorbitant profits. A minority of economists and other analysts see oil traders as playing a somewhat more benign role. While they are likely profiting enormously from the run up in oil prices, such profiteering invariably occurs when there is a tight demand-supply relationship in any commodity.

But, at the same time, speculators also perform the valuable market function of ultimately bringing price stability and assuring long-term supply. In other words, they aid in the allocation of resources over time.

Some political observers have noted that by making oil speculators scapegoats for high prices, politicians deflect criticism from themselves for failing to enact comprehensive energy legislation, and especially for blocking oil exploration and drilling.

The coalition appears to acknowledge as much.

"This country is experiencing its worst energy crisis ever, driven by a confluence of factors, including a weak U.S. dollar, geopolitical tensions, limited supplies, strong global demand and the lack of a cohesive and comprehensive national energy policy," said May.

Action wanted -- now

"This crisis deserves the full attention of Congress - now - not next week, next month or next year. It is too important to wait. We believe that the fastest way to get oil prices under control in the short term is by reducing reckless and unfair speculation in the futures markets while, at the same time, enacting measures for the mid and long term to expand oil supplies, enhance efforts to advance alternative and renewable energy sources, and improve energy conservation across the board," May asserts.

"Without question, energy futures markets, when functioning with proper oversight, serve a useful purpose, especially to bona fide hedgers. But in today's distorted market, rampant oil speculation is devastating both businesses and consumers," says the coalition. "Reasonable financial controls and transparency, which have been eliminated at the urging of the big speculation market players, need to be reestablished," said May.

Some experts have pegged the impact of oil speculation at $20 to $60 per barrel. That translates to between 48 cents and $1.43 per gallon at the gasoline pump.

"Oil speculation has upset the traditional balance between supply and demand," says Michael W. Masters, founder of Masters Capital Management. "If Congress would pass meaningful speculation reform, oil prices would drop significantly within a matter of days or weeks."

The Stop Oil Speculation Now coalition is calling for Congress to push for lower prices immediately by imposing a variety of limits on oil speculation and bringing increased transparency so consumers will know who may be in a position to influence the market.

"This campaign will result in one million messages being sent to Congress ... by concerned citizens mobilized by the SOS Coalition," said May. "This movement is just beginning to grow and we predict it will not stop until Congress acts."

Worrisome campaign?

The massive letter writing and publicity campaign unleashed by the coalitions airline members has some civil libertarians worried.

The campaign is unusual because it signals that giant corporations are now willing to use their massive databases to try to leverage political will in Washington. It is not believed to be the first such effort of its kind, but its the first on such a massive scale.

Tens of millions of e-mails (possibly nearing a hundred million) have been sent by the airlines involved.

Those who worry about concentrated power, in any form, dont view the flood of politically tinged e-mails from the airlines as a wonderful development.

Some even fear the coalition may inject itself into the presidential race. They worry the group could easily send out tens of millions of e-mails a day after a big debate, mentioning neither McCain nor Obama, but stressing some issue that is politically important to their coalition and was mentioned in the debate.

Some of the motorcoach industrys biggest players are oil speculators.

For example, for fiscal 2009, FirstGroup, parent company of Greyhound, Laidlaw, FirstStudent and other bus companies, is 100 percent hedged for its fuel requirements in North America at $84 per barrel.

Stagecoach Group, parent company of Coach USA, Coach Canada and megabus.com, has hedged, using fuel swaps and/or fuel caps, 76 percent of its projected North American fuel usage for fiscal 2009.

Other coach companies across the U.S. are known to hedge fuel purchases through speculative trading, but the amounts are unknown because they are not required to report them publicly.

Optional Takeout

'Some of the motorcoach industrys biggest players are oil speculators.