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U.S. CITIES:
Extra Dollars You're Paying At Pump Going To Wall Street Speculators
Robert B. Reich
Nothing drives voter sentiment like the price of gas -- already up nearly
And nothing energizes Republicans like rising energy prices. House Speaker
If prices at the pump continue to rise, expect the gas wars to intensify.
But the current surge in gas prices has almost nothing to do with energy policy. It doesn't even have much to do with global supply and demand. It has most to do with America's continuing failure to adequately regulate
Oil supplies aren't being squeezed. Over 80 percent of America's energy needs are now being satisfied by domestic supplies. In fact, we're starting to become an energy exporter.
Demand for oil isn't rising in any event. Oil demand in the U.S. is down compared to last year at this time. The American economy is showing only the faintest signs of recovery. Meanwhile, global demand is still moderate.
But
Hedge-fund managers and traders assume that mounting tensions in the
Where there's money to be made,
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.
In other words, a relatively few players with very deep pockets are placing huge bets on oil -- and you're paying.
Chilton estimates that drivers of small cars like Honda Civics are paying an extra
Funny, but I don't hear Republicans rail against
The gas wars may come to a screeching halt before too long, anyway. The Street is placing so many bets on rising oil prices that the slightest hint the speculators are wrong -- almost any sign of expanding supply or declining demand -- is likely to set off a sharp drop in oil prices similar to the record one-day fall on
But that's small comfort to tens of millions of motorists who are paying through the nose at the gas pump right now. Meanwhile, rising gas prices are wagging the election-year dog.
Just remember what's really causing them.
Twitter: @ihavenet
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Extra Dollars You're Paying At Pump Going To Wall Street Speculators | Politics
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