Bob Reich on his blog last week reflected that although historically speculation accounted for 30% of oil contracts, today speculation accounts for 64%. See:
http://robertreich.org/post/19353120672 He also cites CFTC commish Bart Chilton who says that oil markets are controlled by a smaller group of big players -- financial players.
Two years ago, 60 Minutes also reported that anywhere between 60 - 70% of oil contracts were held as speculation -- a figure that was provided by the Petroleum Marketers Association's Dan Gilligan. At the time, 60 Minutes determined that Goldman Sachs was one of the largest oil companies in the world, by virtue of its massive storage facilities. See:
http://www.cbsnews.com/2100-18560_162-4707770.html St. Louis Federal Reserve just released a study yesterday that places 15% of the rise in oil prices in 2008, on speculation, and is the second biggest driver of prices behind oil demand (responsible for 40% of the oil price increase). See:
http://research.stlouisfed.org/publications/es/article/9179I think the point is moot, whether Obama's rhetoric rings true or hollow. Without market reform, Wall Street profits while consumers lose, and there is no way in hell government will investigate Wall Street under Romney; Romney IS Wall Street, Inc.
With the CFTC's new regulatory powers under the Dodd-Frank Act, we could see some action on this front. Too bad then, that Republicans have threatened to overturn the provision that gives the CFTC the power to regulate speculation of oil.
I am reminded that, at the time under George Bush, Republicans insisted that markets were working, despite the signs that Enron had been manipulating energy markets. Instead, Republicans suggested that California was to blame for its own problems of high energy prices. FERC stood still while billions were stolen from Californians and other west coast residents. That is, until the media had investigated and Enron had collapsed -- at that point, FERC couldn't stand by without looking stupid.
So to point out the obvious: Regulation under Republicans is ineffective, because they refuse to regulate. This reinforces the ridiculous point that government is useless, because the truth is, government is useless only when under Republican rule.
