What is going on right now with gas prices should be a crime, but the US government legalized it.
Prior to Clintons second term the only companies allowed to buy gas futures were the regional distributors and major businesses that depended on large amounts of fuel at stable prices. Transportation industries like trucking, trains, air lines, shipping firms, etc or power generation companies. These industries had a vested interest in keeping prices low so you never saw wild speculation driving prices.
If a conflict dried up oil supplies the price spike would gradually move through the system until weeks later the more expensive oil showed in gas prices at the pump.
Clinton opened the gas futures markets to a select few hedge funds in return for campaign support. Bush expanded the list a few times after each of his elections.
Under Obama the market has become a free for all with any person with cash being granted permission to speculate. Literally a friend of a connected person with $10 million in the bank can get permission to buy gas futures.
By allowing these vultures into the market the US government has allowed another layer of profit taking to be inserted between the oil well and the gas pump. Any time you add a layer to a business process you add cost that is passed onto the consumer.
The easy fix is to kick these vultures out of the market and get rid of this 21st century version of the Tea Pot Dome.
Rising oil prices are creating economic anxiety in the United States.
Amid rapidly rising gas prices, President Obama has asked the U.S. Department of Justice to investigate whether Wall Street speculators could be manipulating oil markets, according to reports.
The price you pay at the pump isn’t only determined by demand or what your gas station decides to charge: Wall Street plays some role in how much consumers ultimately pay.
Investment bankers make bets on oil futures, which are contracts between buyers and sellers where the buyer is speculating on whether the price of a barrel of crude oil is going to rise. The buyer receives the barrel at a fixed price.
Massive oil storage facilities cater exclusively to investment banks, which purchase the oil at the price established in the futures contract. If the price of oil rises, the bankers can make a quick and handsome profit.
In this artificial market, world events such as the recent turmoil in the Middle East affect the average price of a barrel of crude oil.
This practice has drawn the scorn of businesses, consumer advocates, politicians, and unions alike. Critics claim that bankers are making a quick profit at the expense of national interests.
Interest groups like S.O.S. Now have formed to oppose crude oil speculation. S.O.S. was formed by an unlikely collation of the aforementioned groups, which don’t normally see eye to eye.
President Obama’s interests lie — at least in part — in getting himself reelected. A Gallup poll from late last month found that Americans are increasingly uneasy about the state of the economy despite falling unemployment numbers and record corporate profits.
It is very likely that gas prices are a major factor in the public’s economic assessment. The average price of gas has risen 30 cents just to US$112 within the past month and nearly a dollar over the past year. Obama has given the issue of oil speculation this full attention.
“We are going to make sure that no one is taking advantage of the American people for their own short-term gain,” Obama said at a rally in Reno, NV. today. Attorney General Eric Holder gave the President’s actions cold water.
“Based upon our work and research to date, it is evident that there are regional differences in gasoline prices, as well as differences in the statutory and other legal tools at the government’s disposal,” Holder said in a memo, the AP reports.
“It is also clear that there are lawful reasons for increases in gas prices, given supply and demand. Nonetheless, where consumers are harmed by unlawful conduct that has the effect of increasing gas prices, state and federal authorities will take swift action.”
