As you max out your credit cards at the gas pumps, you should know that the major players to blame for the spike in gas prices are the same people who tanked the world economy four years ago-- our friends, the Wall Street speculators .
That's right, many of the same banksters--Goldman Sachs, Morgan Stanley, J.P. Morgan, et al., who manipulated the mortgage market with unsecured derivatives, created a bubble that burst in 2007 and 2008, causing a worldwide financial meltdown--are in large part responsible for the skyrocketing price of gas at the pump. Another familiar name, Enron, even has a role in this story.
There are multiple reasons for fluctuations in the price of gas, among them oil supply and demand, and geopolitical developments. But according to Bart Chilton, a commissioner at the Commodity Futures Trading Commission, the federal agency that regulates commodity futures and option trading in the United States, much of the spike in gas prices is due to "excess speculation" by Wall Street traders.
How much? Chilton told ABC News that Honda Civic owners are paying about $7.30 to Wall Street speculators each time they fill up their gas tank. Ford Explorer owners pay even more, an extra $10.41. For a Ford F150, it jumps to $14.56 per fill-up, or about $750 a year. How Wall Street is Raising the Price of Gas .
Chilton said the CFTC is trying to put new rules in place to limit speculation. Wall Street predictably does not approve and is suing the CFTC in order to get an injunction to keep the status quo.There have been investigations, by Congress, by the Justice Department and other federal agencies, but they all seem to fade away under the weight of Wall Street clout. Amazing how that works.
The Consumer Federation of America estimated the average household, which spent almost $2.900 in 2011 on gasoline, will spend almost $600 more this year due to "excessive speculation." They figured deregulation added about $30 per barrel to the cost of oil in 2011, draining more than $200 billion from the economy. "It was weak regulation that landed us in our current economic mess," CFA Director of Investor Protection Barb Roper said, "and it will take a strong policy response to restore the economy to health." CNN Money
And who was responsiblefor the deregulation that enabled the excess speculation in the oil futures market? Steve Kroft asked Michael Greenberger, a former director of trading for the CFTC, that question on a CBS 60 Minutes segment in 2009.
At that hearing, Senator Maria Cantwell (D-WA) pointed out that the oil futures market was set up to moderate the price and risk of petroleum for those who use it. Prior to deregulation, for most of the 20th Century, non-oil-using speculators accounted for 30 percent or less of the oil commodities market. Now that number is closer to 70 percent. Senator Cantwell Press Release
Independent Senator Bernie Sanders of Vermont leaked CFTC data last August showing that at the time of oil's record high near $150 a barrel in July 2008, the market was dominated by big speculative players such as Goldman Sachs, Morgan Stanley, J.P. Morgan and the secretive Swiss oil-trading firm Vitol. You would be correct if you remember hearing many of those names during the 2008 financial meltdown and its aftermath.
According to Senator Sanders, in a Washington Post op-ed last September:
"The CFTC report proved that when oil prices climbed in 2008 to more than $140 a barrel, Wall Street speculators dominated the oil futures market. Goldman Sachs alone bought and sold more than 860 million barrels of oil in the summer of 2008 with no intention of using a drop for any purpose other than to make a quick buck."
The Vermont senator understands what is at stake:
"One of the great questions of our time, is whether the American people, through Congress, will control the greed, recklessness and illegal behavior on Wall Street, or whether Wall Street will continue to wreak havoc on our economy and the lives of working families..."
Arlen is a writer/blogger living in Monterey, CA. His political blog is thebigpicturereport.com. He writes a weekly quotation quiz "What's Your QQ?" (Quotation Quotient) for the Monterey Herald, as well as a quotationquotient.com website and (more...)