Gas speculation report
Several Northwest senators, Washington’s Maria Cantwell and Oregon’s Jeff Merkley among them, have for months been calling repeatedly for imposing stronger regulations on financial speculation in oil – in oil trading. They have been arguing that the speculation has been adding to the cost of gasoline at the pump.
Those claims might, to skeptics, sound a little airy. But they should no longer, with a new report just out from the Political Economy Research Institute of the University of Massachusetts at Amherst. Its title is very specific: “How Wall Street Speculation is Driving Up Gasoline Prices Today.” And it has a very specific number for how much it is doing so: 83 cents per gallon.
From the report:
… we estimate that, without the influence of large-scale speculative trading on oil in the commodities futures market, the average price of gasoline at the pump in May would have been $3.13 rather than $3.96. This means that the average U.S. consumer paid a 83-cent-per-gallon premium in May for their gasoline purchases due to the huge rise in the speculative futures market for oil. Considering the U.S. economy as a whole, this translates into a speculation premium of over $1 billion for May alone. If the May price were to hold for a year, that would mean that the speculative premium would total $12 billion.
For the average U.S. auto owner, the speculative premium amounted to about $41 in May. This means speculative premium for the average two-car family was about $82 in May. That is, each such family spent $82 more in May than necessary for gasoline, and most of this $82 will have made its way into the pockets of large-scale speculators in the oil commodities futures market. (We present details on our data sources, statistical methods, calculations, as well as references to the relevant professional literature in the Appendix to this document).
So if you hit the pump and put 20 gallons of gas in your car, and pay about $79.20, then $16.60 of that amount is going not to the local gas dealership, not to the oil company, not to a distributor, not to anyone who actually develops or helps provide the product. It goes to money shifters on Wall Street. (Another piece of evidence that Wall Street is turning into an active enemy of this nation’s economy by so frequently betting against its best interests.)
The Oregon State Public Interest Research Group, which spread word about the report today, remarked in one report that “We could cut gas prices right now – at no cost to the government or taxpayers – just by restricting speculation in the oil futures markets. And in fact, the Wall Street Reform Act required the Commodity Futures Trading Commission to impose strict limits on the amount of oil that Wall Street speculators could trade in the energy futures market by January of 2011. But in part because of lobbying from big financial firms, that authority has not been used to date.”
Might be helpful to talk to you senators, and representatives, about that.Share on Facebook