For a nation that uses an awful lot of it, we remain ignorant, oblivious to the hard truths about our petroleum supply. For example, who/what's responsible for the rising costs of fueling our greedy cars? Why doesn't the government do something about what we're paying at the pump? And why are we delaying that Canadian pipeline? Most of us are caught between competing interests -- between believing what Republican politicians are trying to sell us and understanding what the analysts know.
The responsibility for the rising costs of gas belongs to our old friend, the, um, "free" market. Remember those neat people we met as they pounded our homes, our jobs, and our futures into the ground in 2008? Those "hedge funds and large financial institutions"? Those investors who bought little slices of our mortgages and took our homes away are also betting against us on the stuff we need to put in our car (if we still have one) to get to work (if we still have a job)?
When people talk about “oil speculation,” they’re usually referring to one of two types of activities. First, there are buyers who actually need oil and want to hedge against wild price fluctuations. But that’s not all that’s going on. Over the last decade, large financial institutions, hedge funds, and other investors have rushed into the oil market to take advantage of big price swings. These traders aren’t buying oil for personal use — typically, they’re betting on which way prices will move. And there’s a lot of money in this: In 2004, there was just $13 billion invested in commodity index trading strategies; by 2008, that had swelled to $260 billion. ...WaPo
Republicans would like to blame government. That's their constant and mind-numbing response to everything. Of course, government has tried to put an end to rogue speculation but every effort is blocked by Congressional Republicans.
You've already seen the right's efforts to block the Commodity Futures Trading Commission (CFTC). Jeff Gelles writes in the Philadelphia Inquirer that "since last fall, and against staunch opposition from Wall Street traders and their GOP allies, the Democratic majority on the CFTC has been trying to reimpose market rules that fell into disfavor during the recent era of bipartisan deregulatory zeal." In other words, the Republicans are talking one game and playing another. You and I are the pawns in their game.
How strong is the evidence on excessive speculation? Some economists question the entire concept, arguing that markets are self-correcting even when complex financial instruments and trading strategies are involved.
But here's the rub: If the market fundamentalists are wrong, speculators may be doing big damage. By one estimate last year from CFTC Commissioner Bart Chilton, excessive speculation costs drivers between $8 and $16 per tank. ...PhilaInq
But the while the government would like to stop the speculation, Republicans are working against them. They like to blame government while pocketing the nice money they get from banks and the oil industry in return for keeping their hands off the greed machine.
The government has never been able to control gas prices because the petroleum market is controlled byof international oil producers, not of the US government. American politicians are tiny specks in the power universe compared to the oil cartel.
Federal policymakers have few options to lower gas prices in the short-term, according to energy analysts.
The recent run-up is fueling election-year political battles and thrusting White House energy policy into the spotlight, with Republicans blaming President Obama and the White House working hard to deflect criticism. As of Friday, gasoline was averaging $3.75 per gallon nationally, according to AAA.
But because gas prices are tethered to oil prices, which are set by global markets based on a slew of complicated factors, energy experts say there’s not a lot U.S. lawmakers or the White House can do, at least in the short term.
“Anybody who says they can affect prices in the next two or three months isn’t being honest,” Robert Kaufmann, chair of the Department of Geography and Environment at Boston University, said. “We’re part of the world market.”
The independent Energy Information Administration, the Energy Department’s statistical arm, has echoed Kaufmann’s sentiments. ...The Hill
So why aren't we overriding all the talk about the damage the Canandian pipeline would do to our land, or agricultural economy, our water resources, and our homes? Why don't we just let them build it? Wouldn't all that be worth it if we could get at least a steady supply of our neighbor's shale oil?
The real answer is no. It's not as though that pipeline is coming through the US and winding up on the Gulf Coast to be refined and sold in our markets. That oil is going overseas. We get to look at it and wish we'd never seen it when we can no longer drink our water or harvest our lumber, thanks to the leaky pipeline. Maybe a little of that oil will be sold back to the American market. But anything that comes back to us comes at a high price -- whatever price the oil cartel puts on it.
Until Americans understand that the "free market" of the 21st century isn't free at all -- that consumer demand alone doesn't determine prices -- we'll continue to blame all the wrong people, remaining in ignorance even as the standard of living of all but the wealthiest Americans continues to drop.