(CNSNews.com) - One of the nation’s most powerful labor unions is “reexamining” its support for drilling for oil in the Arctic National Wildlife Refuge (ANWR), a policy it has supported for several years.
 
The International Brotherhood of Teamsters, which represents 1.4 million workers nationally, has supported expanded drilling in Alaska in the past. But that could change, said Leslie Miller, spokeswoman for the Teamsters, because, as she said, there needs to be a solution in the short term for reducing oil prices and boosting the economy.
 
“We have (supported ANWR drilling) in the past, but I believe we are reexamining that position,” Miller told Cybercast News Service. “There may be an announcement coming up on that.”
 
In May 2006, the Teamsters signed a letter along with six other unions calling on Congress to allow drilling in ANWR.
 
“The opening of ANWR will provide tens of thousands of good paying, skilled jobs for our members and will support their families for many years,” the union letter to members of Congress said.
 
“Many economic studies have demonstrated the beneficial job impacts of opening ANWR,” the letter continued. “The jobs benefits are not just for Alaska. In fact, the ANWR project will have a positive job impact comparable to construction of the Trans Alaska Pipeline.
 
“That venture created various jobs for and income to business in all 50 states – factory workers making equipment for the site, for truckers, mariners, railroad workers who haul these goods and for shipbuilders making the vessels to carry this cargo safely,” the letter added.
 
The 2006 letter further said that drilling in ANWR would enhance global competitiveness.
 
“Since this debate began in 2001 global demand for oil has skyrocketed, and the price of oil has more than doubled, from $28 to $70 a barrel,” the letter said. “With China and India competing to secure sources of crude oil, price reductions are not expected anytime soon. Brazil, Venezuela, Bolivia and France have taken major steps in just the past weeks to maximize their energy security interests.
 
“It is clearly in our own best interests to enhance our domestic oil inventories by exploring and developing,” the letter continued.
 
But on Wednesday of this week, Teamsters President James Hoffa Jr. released a statement praising Senate Majority Leader Harry Reid (D-Nev.) for supporting legislation to “crack down on greedy oil speculators.”
 
“These fuel prices are a disaster for Teamsters and their families," Hoffa said in the statement. “People are feeling the bite every time they fill their gas tank or buy groceries. Their employers are struggling to cope with these high costs, whether they're delivery companies, freight haulers, school districts or airlines.
 
“I'm grateful that Sen. Reid understands how badly American workers are hurting, and that he's doing something about it before Congress goes to recess,” he added.
 
Speculation and acceptable risk
 
As the Senate debates energy policy, Republicans favor more domestic drilling to increase the supply of oil while Democrats favor restrictions on speculators in the futures market, whom many Democrats accuse of artificially driving up the cost of oil.
 
Speculators put money into commodity markets to make money on their investments – unlike commercial investors, who buy or sell orders for physical goods. These often come in the form of large investors such as pension funds.
 
Critics of speculation say retirement funds that accumulate contracts are artificially driving up commodity prices. Thus, in the case of oil, that means higher gas prices and more expensive food and other goods.
 
Those lawmakers who want to crack down on speculation, mostly Democrats with a few Republicans, want to control how many contracts speculators can hold and close loopholes that allow them to skirt regulations.
 
Miller, meanwhile, said drilling could be more of a long-term solution to the oil shortage. She said what the economy needs now is action to reduce the price of oil.
 
“We have 40,000 members working for airlines,” she said. “Airlines can’t survive when oil is $140 per barrel. Congress will be in session for what – another week or so? We definitely need a short-term fix, given the limited time frame and the immediate need.”
 
Others argue that going after speculators won’t do anything to reduce the $4-plus price per gallon of gas at the pump.
 
“Speculators may be easy targets – they may even deserve a bit of the blame for high energy prices – but speculators perform a vital role in financial markets and, unlike congressional actions, any harm speculators do will prove both fleeting and self-correcting,” J.D. Foster, a senior fellow in economic policy for The Heritage Foundation, wrote in a report Thursday.
 
“Congress should get back to the real issues, like getting the government out of the way of increasing domestic production of oil and gasoline.
 
Speculators, Foster said, accept risk where others will not, noting the airline industry as an example. The airlines do not want to bear the risk of higher oil prices.
 
“But at the right price, the speculator will take that risk,” said Foster. “So the speculator contracts with the airline to deliver an amount of oil (or jet fuel) at a certain place and time and for a fixed price.”
 
“The speculator, of course, does not have the oil,” he wrote. “Rather, at the appointed time, the speculator buys the oil on the spot market for delivery. If the spot price is then below the price contracted with the airline, the speculator makes money. If not, the speculator loses. Either way, the airline's price is locked in. Without the speculator on the other side of the transaction, the airline can't hedge its risk.”
 
He added: “This is the first important lesson about speculators: For every contract, there are two parties – in this case, one party with risk they don't want and one party willing to accept the risk at a price.”