Republicans & Rising Gas Prices

  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 6:45 AM GMT
    Why Republicans Aren't Mentioning the Real Cause of Rising Gas Prices at the Pump: By Robert Reich

    Gas prices continue to rise, which is finally giving Republicans an issue. Mitt Romney is demanding the President open up more domestic drilling; the super PAC behind Rick Santorum just released a new ad in Louisiana blasting the President on gas prices; and the GOP is attacking the White House on the Keystone XL Pipeline.

    But the rise in gas prices has almost nothing to do with energy policy. It has everything to do with America's continuing failure to adequately regulate Wall Street. But don't hold your breath waiting for Republicans to tell the truth.

    As I've noted before, 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. Demand is down in the U.S. compared to last year at this time, and global demand is still moderate given the economic slowdowns in Europe and China.

    But Wall Street is betting on higher oil prices in the future -- and that betting is causing prices to rise. The Street is laying odds that unrest in Syria will spill over into other countries or that tensions with Iran will affect the Persian Gulf, and that global demand will pick up as American consumers bounce back to life.

    These bets are pushing up oil prices because Wall Street firms and other big financial players now dominate oil trading.

    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.

    Bart Chilton, a commissioner at the Commodity Futures Trading Commission -- the federal agency that regulates trading in oil futures, among other commodities -- warns that too few financial players control too much of the oil market. This allows them to push oil prices higher and higher -- not only on the basis of their expectations about the future but also expectations about how high other speculators will drive the price.

    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 $7.30 every time they fill up -- and that money is going into the pockets of Wall Street speculators. Drivers of larger vehicles like the Ford Explorer are paying speculators $10.41 when they fill up.

    Funny, but I don't hear Republicans rail against Wall Street speculators. Could this have anything to do with the fact that hedge funds and money managers are bankrolling the GOP as never before?

    Wall Street isn't bankrolling Democrats nearly as much this time around because the Street is still smarting from the Dodd-Frank Wall Street reform law pushed by the Democrats, and from the president's offhand remark in 2010 calling the denizens of the Street "fat cats."

    The Commodity Futures Trading Commission is trying to limit how much speculators can bet in oil futures -- a power it was given by Dodd-Frank. It issued a rule in October, but it won't take effect for another year.

    Meanwhile, Wall Street has gone to court to stop the rule. It's already won a stay.

    As rising gas prices start wagging the election-year dog, the President should let America know what's really causing prices to rise.
  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 10:58 AM GMT
    Us smart cookies knew this all along..
    And not one GOPer will EVER convince me otherwise as long as Oil is traded in the commodities market and speculation is practiced.

    It just doesnt wash!
  • rnch

    Posts: 11524

    Mar 16, 2012 11:05 AM GMT
    The OP's explanation does make sense when you think about it.....



    icon_idea.gif
  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 11:49 AM GMT
    rnch saidThe OP's explanation does make sense when you think about it.....



    icon_idea.gif
    Reich is a Rhodes scholaricon_wink.gif
  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 1:29 PM GMT
    For all this talk about commodities speculation, why no one mentiones the FED? Huge money supply increases are the primary cause of the high oil prices. (Oil price expressed in gold has been relatively stable for a long time). Large part of the freshly created money goes into commodities speculation. Bernanke, who is clearly most responsible for this, was originally appointed by Bush, but was reappointed by Obama. Talk about bipartisanship.

    Same for American destabilisation of the Middle East for the last 50 years or so: it creates a permanent premium on the oil prices, and has been willingly supported by both parties.

    True enough, Republicans may be overall more warmongering, but then the Democrats are more responsible for excessively stringent and bureaucratic environmental protection acts, which increases the costs of domestic oil production.
  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 1:37 PM GMT
    I wish I could have timed the market a little better.

    Still, I might be able to short some energy holdings as I expect prices will fall in late September or October.
  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 2:53 PM GMT
    Radamisto saidFor all this talk about commodities speculation, why no one mentiones the FED? Huge money supply increases are the primary cause of the high oil prices. (Oil price expressed in gold has been relatively stable for a long time). Large part of the freshly created money goes into commodities speculation. Bernanke, who is clearly most responsible for this, was originally appointed by Bush, but was reappointed by Obama. Talk about bipartisanship.

    Same for American destabilisation of the Middle East for the last 50 years or so: it creates a permanent premium on the oil prices, and has been willingly supported by both parties.

    True enough, Republicans may be overall more warmongering, but then the Democrats are more responsible for excessively stringent and bureaucratic environmental protection acts, which increases the costs of domestic oil production.


    http://news.investors.com/article/604303/201203141303/oil-abundant-in-the-united-states.htm
  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 3:04 PM GMT
    Oooops... True enough, Republicans may be overall more warmongering, but then the Democrats are more responsible for excessively stringent and bureaucratic environmental protection acts, which increases the costs of domestic oil production.


    Y U NO KEYSTONE?

    Drill, Baby. Drill.
  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 3:35 PM GMT
    AlphaTrigger said
    Oooops... True enough, Republicans may be overall more warmongering, but then the Democrats are more responsible for excessively stringent and bureaucratic environmental protection acts, which increases the costs of domestic oil production.


    Y U NO KEYSTONE?

    Drill, Baby. Drill.


    Drill here, drill often.
  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 5:06 PM GMT
    TropicalMark saidUs smart cookies knew this all along.
    And not one GOPer will EVER convince me otherwise as long as Oil is traded in the commodities market and speculation is practiced. It just doesnt wash!


    Sadly, a huge chunk of American voters are not smart cookies!! And, many who do know will choose to ignore the truth due to personal agendas. Sad.
  • Posted by a hidden member.
    Log in to view his profile

    Mar 16, 2012 8:39 PM GMT
    Aren't High Gas Prices What Democrats Want?
    If high energy prices were to damage President Barack Obama's re-election prospects, it would be ironic.

    Gas prices are spiking. That's great news, right? We have to wean ourselves off the stuff. At least that's what we've been hearing for years. Oil is dirty. We import it from nations that hate our guts (like Canada!). And moreover, we're running out. Oil is "finite." Finite much in the way water is finite.

    So why aren't Democrats making the case that the spike in prices is a good thing? Isn't this basically our energy policy these days? How we "win the future"? If high energy prices were to damage President Barack Obama's re-election prospects, it would be ironic, considering the left has been telling us to set aside our "dependency"—or, as our most recent Republican president put it, "addiction"—for a long time.

    If Democrats had their way, after all, we would be enjoying the economic results of cap-and-trade policy these days—a program designed to increase the cost of energy by creating false demand in a fabricated market. As the theory goes, if you inflate the price of fossil fuels, the barbarians might finally start putting thought into how peat moss might be able to power a toaster.

    In 2008, Steven Chu, Obama's (and, sadly, our own) future secretary of energy (sic) lamented, "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe." The president, when asked whether he thought $4-a-gallon gas prices were good for the American economy, said, "I think that I would have preferred a gradual adjustment."

    How gradual? Like, what, four years? Or is it eight?

    Part of "figuring it out" surely had something to do with the recent decision by Obama to nix the Canadian Keystone XL pipeline project that would have pumped 700,000 barrels of oil per day into the United States. More oil just means more excessive, immoral, ugly energy use.

    Well, get used to it. You can't take three steps without stepping over some potential 10-billion barrel reserve of dead organisms.

    According to the Institute for Energy Research, there is enough natural gas in the U.S. to meet electricity demand for 575 years at current fuel demand, enough to fuel homes heated by natural gas for 857 years and more gas in the U.S. than there is in Russia, Iran, Qatar, Saudi Arabia and some place called Turkmenistan combined. Oil? The U.S. Energy Information Administration estimates that the United States could soon overtake Saudi Arabia and Russia to become the world's top oil producer. There are tens of billions of easily accessible barrels of offshore oil here at home—and much more oil around the world.

    Yes, gas prices have spiked an average of 14 cents a gallon in the past month and about 30 cents a gallon since last November, according to AAA. Oil prices jumped to a nine-month high—more than $105 a barrel—after the Iranians shut down their own energy exports to Britain and France so they could start a much-needed nuclear program, which is, no doubt, for wholly peaceful purposes.

    Given the fungibility of commodities and the track record of civilization in the Middle East, we'll likely always have to deal with occasionally painful fluctuations in the price of energy, regardless of what we do at home—drilling and new pipelines included. Still, fluctuations have a lot better track record than price controls.

    Subsidizing quixotic green companies or creating carbon credits won't stop the rules of basic economics. If the gas crunch starts hitting the economy, it's doubtless that we will get an earful of populist hand-wringing and that we'll hear the administration once again blame wealthy speculators and nasty oil companies.

    Yet in the end, high gas prices are part of the plan. This is what the administration wants.


    David Harsanyi is a columnist at The Blaze. Follow him on Twitter @davidharsanyi.


    http://reason.com/archives/2012/02/22/arent-high-gas-prices-what-democrats-wan