Wall Street Oil Speculation Driving Surge in Gas Prices

[midnight]

The price of Brent Crude, the world's most traded category of oil, dipped slightly today after reaching a nine-month high earlier in the week. Overall, US gas prices have continued to surge despite declining demand, and the airwaves and national media are flooded with worrying headlines about consumers furious over out-of-control prices.


That speculators have a huge impact on oil and gasoline prices is not news to anyone paying attention to the subject over the years, but it is an aspect that most media outlets rarely mention -- even when spiking gasoline prices dominate the news cycle. And legislatively, efforts to bring damaging speculative practices under control have continually stalled in Congress. (Image: Bloomberg)
"On Tuesday," according to reporting by McClatchy's Kevin G. Hall, "Oil [prices] rose past $106 a barrel and gasoline averaged $3.57 a gallon — thanks again in no small part to rampant financial speculation on top of fears of supply disruptions."

Hall's report highlights the fact that despite rising prices at US gas pumps, demand in the US was so low it has "become a net exporter of gasoline, unable to consume all that it generates."

This fact contradicts the familar refrain from GOP politicians and operatives who claim that a 'Drill Everywhere' agenda would solve US energy woes or lead to lower prices for consumers.http://www.commondreams.org/headline/2012/02/22-2

[alfredo]

1. Aren't the Koch brothers big oil speculators? Could they be manipulating oil prices to hurt Obama?

[BlueCaliDem]

2. I wouldn't put it past them, and I believe they are oil speculators. It's frustrating when the media

don't mention this in their "reporting". This is why the majority of Americans believe the president is behind it. They're not being educated and isn't that what our fourth estate is supposed to do?

[alfredo]

7. Looks like they were pioneers of oil derivatives.

http://thinkprogress.org/report/koch-oil-speculation/

– October 6, 1986: First oil derivative is introduced to Wall Street by traders at Koch. Koch Industries executive Lawrence Kitchen devised the “first ever oil-indexed price swap between Koch Industries and Chase Manhattan Bank.” At the time, such derivatives had been limited to currency markets, and the shift of creating a synthetic financial instrument based on the value of crude oil was revolutionary. For an agreed-upon period, an oil swap is a contract where one party makes payments based on a fixed oil price, and the other party makes payments back based on the changing spot price of oil. In July of 2009, EnergyRisk magazine, a publication for commodity traders, posted a piece exploring the very first oil derivatives and Koch’s role in developing them.
– 1990-1992: Koch, along with several oil companies and Wall Street speculators, form a coalition lobbying group to deregulate oil speculation. A coalition called “The Energy Group” is organized to press the Commodity Futures Trading Commission (CFTC) to allow oil derivatives to be traded off the NYMEX or any other regulated exchange. Participants in the coalition include Koch, Enron, Phibro (a powerful commodity speculator firm recently sold from Citigroup to Occidental Petroleum), J. Aron & Co (a commodity trading division of Goldman Sachs), BP, and other companies.

[Zoeisright]

3. Of course it is.

Tax the shit out of Wall Street and institute a windfall profit tax.

[CAPHAVOC]

4. Refineries

Are not oil companies. They must buy the oil. They do not produce it. The best way to screw the speculators is to increase supply. That is why Obama will again open the Strategic Oil Supply spigot. Of course we will end up with no reserve. I expect to see gas hit 7 or 6 bucks. What would you do with the tax collected on the profits? Windmills and solar panels will not help. People can't afford new cars. This is going to get ugly.

[4dsc]

5. Peak oil is coming folks

While I object to high gas prices like the next person I do understand that our current way of life is not sustainable.

[1monster]

6. Peak oil may be coming or may already be here. But that is not the reason

gas prices are rising now and not the point of this article.

I doubt that the speculators give a flying leap off a shallow curb about peak oil other than how they can make big bucks off of it.