A brief radio announcement I heard tonight indicated that by the end of the year, prices at the gas pumps could be between seven and ten dollars a gallon.  While the rise in price for each barrel of oil is currently good for North Dakota and other areas surrounding the Bakken oil formation, high gas prices could have a severe negative impact on our entire economy. 

In response to the rising gas prices, North Dakota Gov. John Hoeven wrote a letter to national administrators urging them to investigate whether oil market speculation is contributing to the gas-pump crisis.  Part of that letter can be found in a press release posted on the Governor’s web site.  The entire excerpt is worth repeating here.  Gov. Hoeven wrote:

“The impacts of rising fuel prices affect all sectors of our economy, from American consumers to farmers to businesses. Despite the fact that refineries this year are currently running at normal capacity, fuel prices have risen significantly in recent weeks due to the recent run-up in the price of crude oil, with the implication that other factors are coming to bear on the price of motor fuel.

“Although higher global demand and a weakened dollar are contributing to higher fuel prices in the short term, it appears that financial investment firms and big hedge funds are pouring billions of dollars into oil futures. This activity is creating a speculation premium that is driving up crude oil prices and increasing the cost of fuel at the pump for the American people.

“Mr. Secretary, I am asking that the Department of Energy and federal financial regulators investigate to determine if financial speculation or manipulation of the oil commodity markets is driving crude prices higher, and then to take appropriate regulatory action. In addition, we urge the Administration to impose a temporary freeze on adding to the Strategic Petroleum Reserve until we see some relief in fuel prices.

“In the long term, the solution to high fuel prices is increasing the domestic supply and processing of both traditional and renewable fuels, which has been the focus of our efforts in North Dakota. Since 2000, we have worked with our producers to boost production of crude oil in Western North Dakota by more than 50 percent, and we continue to increase production in new geologic structures, like the Bakken formation. In addition, we are aggressively working on four projects to build or expand refinery capacity, in addition to expanding pipeline infrastructure in the state to help increase supply.

“Again, Mr. Secretary, I ask you, together with federal financial regulatory agencies, to investigate and address oil market speculation or manipulation that is driving short-term oil prices higher. At the same time, we request that the Administration discontinue adding to the Strategic Petroleum Reserve to help take pressure off crude oil prices until our consumers, farmers, and businesses see some relief from high fuel prices.”

It’s good to see someone acting in behalf of the people.  Commendations to Gov. John Hoeven for his foresight and willingness to act.