Oil speculators putting the squeeze on us
Soaring gas prices once again have consumers stretched over the barrel, thanks to excessive speculation in the oil market.
It feels like 2008 all over again when oil hit a record $147 per barrel and gasoline prices reached $4.11 nationwide.
And yet the Energy Information Administration says the supply of oil and gasoline is higher today than three years ago when the price was $1.90 per gallon. Petroleum prices are no longer driven solely by the fundamental economic law of supply and demand.
Forbes magazine reported last month that oil speculators add 56 cents to the cost of a gallon of gas at the pump. It also puts a strain on the economy as rising oil prices reduce our gross domestic product.
A strong argument can be made that allowing people to financially profit from speculating in oil hurts more people than it helps. It’s one thing to trade gold, silver or other precious metals. It’s another when so much of our economy revolves around petroleum.
People have no choice when it comes to buying gas to get to work. They also have no choice when it comes to feeding their families. Higher food prices are a direct result of an agricultural economy dependent upon petroleum — from fuel to fertilizer.
One solution to ending the rampant speculation would be to require traders to actually take delivery of their product. Want to buy 100,000 barrels of oil? No problem. Install some big tanks in your basement.
But there is a real solution that’s being held up in the federal bureaucracy. The Wall Street reform act of 2010 mandated that the Commodity Futures Trading Commission put position limits on contracts for crude oil and heating oil. The limits were to be in place by Jan. 17, 2011. They were finally approved in October but are not yet in effect.
Monday, a letter was sent from 70 members of Congress — including Sens. Amy Klobuchar and Al Franken of Minnesota — to the CFTC asking that it immediately put the limits into place. The letter says oil speculators now control 80 percent of the energy futures market.
Our nation still has not recovered from the economic calamity of 2008 that most blame on Wall Street speculators. It’s time to rein in the speculators. We should not let the greed of a few decimate the lives of millions of others.
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