Oil Speculators Drive Up Gas Prices
I’ve posted on this a few times already. But with the message wars heating up, bloggers who aren’t affiliated with Wall Street or the Koch Brothers will need to keep stressing these points relentlessly. “Drill Here Drill Now” will be echoing louder and louder between now and November.
Bernie Sanders has written a letter — co-signed by sixty-seven other congressmen — which is based on a report by the St. Louis Federal Reserve titled “Speculation in the oil market.” The letter is urging the Commodity Futures Trading Commission (CFTC) to install caps that would prevent Wall Street’s largest traders from establishing too much control in the oil futures trading market.
If you get your “news” from Fox or talk radio, the preceding sentence would translate to “strangling the economy with too many cumbersome regulations.”
The report cites “global demand shocks” — e.g. tensions in the Middle East — and speculation as the two largest causes of surging oil prices.
Bernie Sanders said:
“If the St. Louis Federal Reserve, a conservative institution, is saying speculation is contributing significantly to the high price of oil and gas at the pump, then I think that is clearly what the case is.”
The letter says the CFTC has failed to enact position limits on oil futures traders, even though the CFTC is required under existing law to create and enforce these limits. The letter states in part:
“As the cost for American people to fill their gas tanks continues to skyrocket, the CFTC continues to drag its feet on imposing strict speculation limits to eliminate, prevent, or diminish excessive oil speculation as required by the Dodd-Frank Act. Although the CFTC has adopted initial position limits, they are not strong enough and not yet in force owing to industry opposition, delays in swaps oversight and data collection. This is simply unacceptable and must change.”
As glacial as the CFTC’s pace has been, the agency is being sued by two Wall Street lobbying organizations: the International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association.
We’ll find out who has more political clout: Wall Street or hundreds of millions of American motorists.
(It was a rhetorical question.)