Washington, July 26 : A University of Illinois economist has said that America's energy shortage problems have been stretched thin by a surging demand for the product from India, China and other developing countries.
Scott Irwin, an agricultural and consumer economics professor at the university said that in the light of this development, there is a need for Americans to engage in debate on how to bring down gasoline prices and use their energy resources more profitably. He told a House Committee that congressional efforts to curb trading by speculators is a "misguided witch hunt" that ignores the root of America's energy problem.
"We need to have a real national debate about issues related to both the demand side and the supply side of our energy use. That's what we need to be focusing on, not speculators," said Irwin, who testified this month before a House committee considering limits on speculation in futures markets.
The U.S. Senate, however, voted unanimously this week to move ahead on legislation to curtail speculation in oil futures markets, which Irwin contends would be a step backward in the battle against a four dollar-a-gallon gasoline prices.
"If the markets become over-regulated, they become less efficient mechanisms for transferring risk from parties who don't want to bear it to those that do, creating added costs that ultimately get passed back to consumers," Irwin claimed.
Dozens of proposals have surfaced to scale back speculation that has exploded in oil markets over the last few years.
Billions of dollars have been pumped into oil futures and related over-the-counter derivative contracts, which supporters of trading limits contend has artificially inflated oil prices by 20 to 50 percent.
Irwin maintains that speculation accounts, at most, for a small part of the recent spike in oil prices, based on a recent study of commodity futures markets he conducted with Southern Illinois University agribusiness economist Dwight Sanders.
The study shows that a surge in trading by commodity firms has offset the dramatic rise in speculation, maintaining a market balance of buyers and sellers.
"There's a tendency to look for a scapegoat, and speculators are the convenient scapegoat, but, really, it's a supply and demand issue," he said.