We know it’s not demand. It’s been established demand is down in the U.S. and while global demand is rising over the long term, the stalled economies in Europe and China’s quickly slowing growth are keeping global demand moderate. So if it’s not demand, what could be driving up the price of gas? Oh, here’s a clue:
Financial speculators historically accounted for about 30 percent of oil contracts, producers and end users for about 70 percent. But today speculators account for 64 percent of all contracts. …
Bart Chilton, a commissioner at the Commodity Futures Trading Commission — the federal agency that regulates trading in oil futures, among other commodities — warns that too few financial players control too much of the oil market. This allows them to push oil prices higher and higher — not only on the basis of their expectations about the future but also expectations about how high other speculators will drive the price.
In other words, a relatively few players with very deep pockets are placing huge bets on oil — and you’re paying.
If only there was a way to stop this profiteering. Oh wait…
The Commodity Futures Trading Commission is trying to limit how much speculators can bet in oil futures — a power it was given by Dodd-Frank. It issued a rule in October, but it won’t take effect for another year.
Meanwhile, Wall Street has gone to court to stop the rule. It’s already won a stay.
Of course, they did. The courts can only rule to the law and here is where the government is to blame. And by government, I don’t mean any president. The courts can only stop them if Congress enacts a law that makes this sort of market manipulation explicitly illegal. Dodd-Frank was a step in that direction. Republican leaders are working with Wall Street to kill that law before it takes effect. So that nothing will change and oil speculators will be free to continue to manipulate the markets.
Republicans call this a fight for freedom from “regulatory burdens.” Me, I call it protecting their super-rich campaign donors.
Adding, in response to comments to my earlier post, here’s a chart showing how much we pay in relation to Europe.
America produces 200 times as much oil as Germany, but our gas prices rise and fall in tandem. Source: Energy Information Administration and NY Times.
As noted, no matter how high the price of gas gets here, we still pay significantly less than other countries because we pay far lower gas taxes. More charts and facts about gas at this link.
So to reiterate, the only path to energy independence is to use less oil and develop alternatives to all fossil fuels. Which would also greatly help protect our planet from manmade climate disasters.