Wall Street greed fueling high gas prices
Posted: Tue Feb 28, 2012 1:26 pm
Of course we ALL knew this! 
(CNN) -- Gas prices approaching $4 a gallon on average are causing severe economic pain for millions of Americans. Pump prices spiked 5% in the past month alone. Crude oil prices stood at $108 on Friday, up from only double digits at the beginning of the month.
What's the cause? Forget what you may have read about the laws of supply and demand. Oil and gas prices have almost nothing to do with economic fundamentals. Supplies are greater than ever before in the United States. Demand for oil in the U.S. is at its lowest level since 1997.
Is Big Oil to blame? Sure. Partly. Big oil companies have been gouging consumers for years. They have made almost $1 trillion in profits over the past decade, in part thanks to ridiculous federal subsidies and tax loopholes. I have proposed legislation to end those pointless giveaways to some of the biggest and most profitable corporations in the history of the world.
But there's another reason for the wild rise in gas prices. The culprit is Wall Street. Speculators are cashing in by jacking up oil and gas prices in the very loosely regulated energy futures market.
A decade ago, speculators controlled only about 30% of the oil futures market. Today, Wall Street speculators control more than 70%.Many of those people buying and selling oil in the commodity markets will never use a drop of this oil. They are not airlines or trucking companies that will use the fuel in the future. The only function of the speculators in this process is to make as much money as they can, as quickly as they can.
I've seen the raw documents that prove the role of speculators. Commodity Futures Trading Commission records show that in the summer of 2008, the last time gas prices spiked to more than $4 a gallon, Goldman Sachs, Morgan Stanley and other speculators dominated the crude oil futures market. The commission, which is meant to represent the interests of the American people, had kept the information hidden from the public for nearly three years. That alone is an outrage. The American people had a right to know exactly who caused gas prices to skyrocket in 2008 and who is causing them to spike today.
Even those inside the oil industry have admitted that speculation is driving up the price of gasoline. The CEO of Exxon-Mobil, Rex Tillerson, told a Senate hearing last year that speculation was driving up the price of a barrel of oil by as much as 40%. The general counsel of Delta Airlines, Ben Hirst, and the experts at Goldman Sachs said excessive speculation is causing oil prices to spike by up to 40%. Even Saudi Arabia, the largest exporter of oil in the world, told the Bush administration back in 2008, during the last major spike in oil prices, that speculation was responsible for about $40 of a barrel of oil.
ref:
http://www.cnn.com/2012/02/28/opinion/s ... ?hpt=us_c2
(CNN) -- Gas prices approaching $4 a gallon on average are causing severe economic pain for millions of Americans. Pump prices spiked 5% in the past month alone. Crude oil prices stood at $108 on Friday, up from only double digits at the beginning of the month.
What's the cause? Forget what you may have read about the laws of supply and demand. Oil and gas prices have almost nothing to do with economic fundamentals. Supplies are greater than ever before in the United States. Demand for oil in the U.S. is at its lowest level since 1997.
Is Big Oil to blame? Sure. Partly. Big oil companies have been gouging consumers for years. They have made almost $1 trillion in profits over the past decade, in part thanks to ridiculous federal subsidies and tax loopholes. I have proposed legislation to end those pointless giveaways to some of the biggest and most profitable corporations in the history of the world.
But there's another reason for the wild rise in gas prices. The culprit is Wall Street. Speculators are cashing in by jacking up oil and gas prices in the very loosely regulated energy futures market.
A decade ago, speculators controlled only about 30% of the oil futures market. Today, Wall Street speculators control more than 70%.Many of those people buying and selling oil in the commodity markets will never use a drop of this oil. They are not airlines or trucking companies that will use the fuel in the future. The only function of the speculators in this process is to make as much money as they can, as quickly as they can.
I've seen the raw documents that prove the role of speculators. Commodity Futures Trading Commission records show that in the summer of 2008, the last time gas prices spiked to more than $4 a gallon, Goldman Sachs, Morgan Stanley and other speculators dominated the crude oil futures market. The commission, which is meant to represent the interests of the American people, had kept the information hidden from the public for nearly three years. That alone is an outrage. The American people had a right to know exactly who caused gas prices to skyrocket in 2008 and who is causing them to spike today.
Even those inside the oil industry have admitted that speculation is driving up the price of gasoline. The CEO of Exxon-Mobil, Rex Tillerson, told a Senate hearing last year that speculation was driving up the price of a barrel of oil by as much as 40%. The general counsel of Delta Airlines, Ben Hirst, and the experts at Goldman Sachs said excessive speculation is causing oil prices to spike by up to 40%. Even Saudi Arabia, the largest exporter of oil in the world, told the Bush administration back in 2008, during the last major spike in oil prices, that speculation was responsible for about $40 of a barrel of oil.
ref:
http://www.cnn.com/2012/02/28/opinion/s ... ?hpt=us_c2