ROBERT Reich is spot on in this piece. mitt romney isn't offering anything but criticism but Pres Obama must do more to show the American electorate he, and a Democratic Congress can lead us out of the recession. I hope someone at the WH and the campaign HQ in Chicago is paying attention....
President Obama's electoral strategy can best be summed up as: "We're
on the right track, my economic policies are working, we still have a
long way to go but stick with me and you'll be fine."
That's not good enough. This recovery is too anemic, and the chance
of an economic stall between now and Election Day far too high.
Even now, Mitt Romney's empty "I'll do it better" refrain is
attracting as many voters as Obama's "we're on the right track." Each
man is gathering 46 percent of voter support, according to the latest New York Times/CBS poll.
Only 33 percent of the public thinks the economy is improving while 40
percent say they're still falling behind financially -- an 11 point
increase from 2008. Nearly two-thirds are concerned about paying for
housing, and one in five with mortgages say they're underwater.
If the economy stalls, Romney's empty promise will look even better.
And I'd put the odds of a stall at 50-50. That puts the odds of a Romney
presidency far too high for comfort. Need I remind you that Romney
enthusiastically supports Paul Ryan's wildly regressive budget, and as
president would be able to make at least one or possibly two Supreme
Court appointments, and control the EPA and every other federal agency
and department?
The Obama White House should face it: "We're on the right track"
isn't sufficient. The president has to offer the nation a clear, bold
strategy for boosting the economy. It should be the economic mandate for
his second term.
It should consist of four points:
First, Obama should demand that the nation's banks
modify mortgages of homeowners still struggling in the wake of Wall
Street's housing bubble -- threatening that if the banks fail to do so
he'll fight to resurrect the Glass-Steagall Act and break up Wall
Street's biggest banks (as the Dallas Fed recently recommended).
Second, he should condemn oil speculators for
keeping gas prices high -- demanding that the oil companies allow the
Commodity Futures Trading Corporation to set limits on such speculation
and instructing the Justice Department to investigate and prosecute oil
price manipulation.
Third, he should stand ready to make further
job-creating investments in the nation's crumbling infrastructure, and
renew his call for an infrastructure bank. And while he understands the
need to reduce the nation's long-term budget deficit, he won't allow
austerity economics to take precedence over job creation. He'll veto
budget cuts until unemployment is down to 5 percent.
Finally, he should make clear the underlying problem
is widening inequality. With so much of the nation's disposable income
and wealth going to the top, the vast middle class doesn't have the
purchasing power it needs to fire up the economy. That's why the Buffett
rule, setting a minimum tax rate for millionaires, is just a first step
for ensuring that the gains from growth are widely shared.
The president can still say we're on the right track. But he should
also say he's not content with the pace of the recovery and will do
everything in his power to quicken it. And he should ask the American
people for a mandate in his second term to make the economy work for
everyone, not just those at the top.
Such a mandate can be put into effect only with a Congress that's
committed to better jobs and wages for all Americans. He should remind
voters that Congressional Republicans prevented him from doing all that
was needed in the first term, and they must not be allowed to do so
again.
Robert Reich, Chancellor's Professor of Public Policy at Berkeley and former
Secretary of Labor, is the author of "Beyond Outrage." His widely-read blog can be found at www.robertreich.org.
http://www.huffingtonpost.com/robert-reich/obama-romney-economy_b_1438652.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications
BUCKNACKT'S SORDID TAWDRY BLOG We should not be a journey to the grave with the intention of arriving safely in an attractive & well preserved body, but rather to skid in sideways, chocolate, bier or wein in hand, body thoroughly used up, totally worn out and screaming "WHOO-HOO, WHAT A RIDE!!!!!!"
Showing posts with label oil speculators. Show all posts
Showing posts with label oil speculators. Show all posts
20 April 2012
16 March 2012
Why Republicans Aren't Mentioning the Real Cause of Rising Prices at the Gas Pump 15MAR12
THE repiglicans and tea-baggers won't tell America who is primarily responsible for the high gas prices for the same reason they won't support ending the tax subsidies for big oil; it is because their corporate masters on wall street won't let them. They are political whores, and are owned by and responsible to corporate America. Also, to tell the truth about gas prices would eliminate the propaganda campaign they are waging with lies and deception to keep the hatred of the right wing base focused on Pres Obama, too many of whom don't want or need facts and truth, they just want to hate Obama because they are ignorant racist. From HuffPost....
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.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
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.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
02 March 2012
Gas Prices Inspire War Of Words: Obama, Dems Take On GOP & Get the Facts: Our Dependence on Foreign Oil is Declining 1MAR12
I would like to hear how the Christian leadership of the republican / tea-bagger caucus in Congress can justify the lies and deception they are spreading about gas prices and oil production in the U.S. Christian politicians shouldn't have to lie about the issues and their policies if they are the truth. There is nothing Christian or religious in their manipulation of the facts to increase their political power and the the already obscene profits of the big oil companies that own them through their campaign contributions. Pres Obama and Democrats are challenging the entire Congress to end the federal subsidies and tax breaks for big oil. E mail your Senator here http://www.senate.gov/general/contact_information/senators_cfm.cfm
and your Representative here https://writerep.house.gov/writerep/welcome.shtml
and Pres Obama here http://www.whitehouse.gov/contact and demand
an end to the federal subsidies and tax breaks for big oil companies. This from HuffPost
WASHINGTON -- People who claim a lack of oil drilling is to blame for spiking gasoline prices are either dumb or dishonest, President Barack Obama argued Thursday as Democrats ramped up their defense against Republicans claiming just that.
"Anybody who tells you that we can just drill our way out of this problem does not know what they're talking about, or they're not telling you the truth -- one or the other," Obama said at an event held in New Hampshire to tout his energy policies.
He noted that, in fact, oil production in the United States has hit its highest level in eight years, that more rigs are operating in the U.S. than in the rest of the world combined, that more than 400 drilling permits have been granted since the massive BP oil spill, and that for the first time in 13 years, oil imports account for less than half of all U.S. oil consumption.
"And no matter what you hear from some folks in an election year, the key part of this strategy over the last three years has been to increase safe, responsible oil production here at home, while also pursuing clean energy for the future," Obama added.
Regardless, Republicans, who launched a coordinated assault on the administration over gas prices earlier this week, kept up the drumbeat on Thursday.
"American families and small businesses continue to struggle, and they're especially feeling the impact of rising gas prices, which have doubled under President Obama," House Speaker John Boehner (R-Ohio) told reporters in his weekly briefing.
In the other chamber, Sen. John Barrasso (R-Wyo.) took to the floor to make the GOP case in the wake of Obama's speech. "It's clear that the president is defensive on this issue," said Barrasso, who also blamed Obama for a doubling of of gas prices.
Neither he nor Boehner noted that the current average of $3.73 per gallon is lower than the price at the start of the recession during the Bush administration.
"The president's polices are at best ineffective and at worst are contributing to the higher gas prices," Barrasso said, before hitting the week's mantra of demanding more drilling.
"The president actually has some options that make a lot of sense to a lot of Americans," said the senator, "and that option, of course, is to increase American energy production."
Obama also renewed his request to end $4 billion in tax subsidies that the oil companies still receive every year, even as they're reaping record profits. The GOP was quick to attack that as well.
"Democrats have already acknowledged that the idea the President discussed today won't lower gas prices," Boehner said later the same day in a statement. "In fact, the nonpartisan Congressional Research Service says it would increase them. Republicans are focused on an all-of-the-above energy policy, and I remain hopeful the President will follow through on his commitment to work with us to increase the supply of American-made energy."
House Minority Leader Nancy Pelosi (D-Calif.) tried a different angle in the Democratic pushback, suggesting that the top driver of gas prices right now is not supply but aggressive speculation in oil markets. She pointed to blocked efforts by the Commodity Futures Trading Commission to stop such speculation, which the CFTC estimates adds more than 50 cents a gallon to the price of gas.
"What's happening about the price at the pump is very interesting," Pelosi said in her weekly press conference. "Supply is going up, demand is going down, and the price is going up," she said, referring to recent data to that effect.
"So how do you explain that?" Pelosi asked. "You explain it by recognizing that Republicans are protecting Wall Street speculators responsible for driving up the pain at the pump."
Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.
and your Representative here https://writerep.house.gov/writerep/welcome.shtml
and Pres Obama here http://www.whitehouse.gov/contact and demand
an end to the federal subsidies and tax breaks for big oil companies. This from HuffPost
WASHINGTON -- People who claim a lack of oil drilling is to blame for spiking gasoline prices are either dumb or dishonest, President Barack Obama argued Thursday as Democrats ramped up their defense against Republicans claiming just that.
"Anybody who tells you that we can just drill our way out of this problem does not know what they're talking about, or they're not telling you the truth -- one or the other," Obama said at an event held in New Hampshire to tout his energy policies.
He noted that, in fact, oil production in the United States has hit its highest level in eight years, that more rigs are operating in the U.S. than in the rest of the world combined, that more than 400 drilling permits have been granted since the massive BP oil spill, and that for the first time in 13 years, oil imports account for less than half of all U.S. oil consumption.
"And no matter what you hear from some folks in an election year, the key part of this strategy over the last three years has been to increase safe, responsible oil production here at home, while also pursuing clean energy for the future," Obama added.
Regardless, Republicans, who launched a coordinated assault on the administration over gas prices earlier this week, kept up the drumbeat on Thursday.
"American families and small businesses continue to struggle, and they're especially feeling the impact of rising gas prices, which have doubled under President Obama," House Speaker John Boehner (R-Ohio) told reporters in his weekly briefing.
In the other chamber, Sen. John Barrasso (R-Wyo.) took to the floor to make the GOP case in the wake of Obama's speech. "It's clear that the president is defensive on this issue," said Barrasso, who also blamed Obama for a doubling of of gas prices.
Neither he nor Boehner noted that the current average of $3.73 per gallon is lower than the price at the start of the recession during the Bush administration.
"The president's polices are at best ineffective and at worst are contributing to the higher gas prices," Barrasso said, before hitting the week's mantra of demanding more drilling.
"The president actually has some options that make a lot of sense to a lot of Americans," said the senator, "and that option, of course, is to increase American energy production."
Obama also renewed his request to end $4 billion in tax subsidies that the oil companies still receive every year, even as they're reaping record profits. The GOP was quick to attack that as well.
"Democrats have already acknowledged that the idea the President discussed today won't lower gas prices," Boehner said later the same day in a statement. "In fact, the nonpartisan Congressional Research Service says it would increase them. Republicans are focused on an all-of-the-above energy policy, and I remain hopeful the President will follow through on his commitment to work with us to increase the supply of American-made energy."
House Minority Leader Nancy Pelosi (D-Calif.) tried a different angle in the Democratic pushback, suggesting that the top driver of gas prices right now is not supply but aggressive speculation in oil markets. She pointed to blocked efforts by the Commodity Futures Trading Commission to stop such speculation, which the CFTC estimates adds more than 50 cents a gallon to the price of gas.
"What's happening about the price at the pump is very interesting," Pelosi said in her weekly press conference. "Supply is going up, demand is going down, and the price is going up," she said, referring to recent data to that effect.
"So how do you explain that?" Pelosi asked. "You explain it by recognizing that Republicans are protecting Wall Street speculators responsible for driving up the pain at the pump."
Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.
 | Thursday, March 1, 2012 | ||
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21 February 2012
The Gas Wars (IT IS TIME TO FIGHT BACK!) 21FEB12 & Oil Slicks: Who Benefits From Gambling on Gas Prices? 22FEB12
THERE'S never been a better time to put pressure on Congress to end the federal subsidies for big oil than now, while they are reaping huge profits from speculator driven high oil prices. It is time for people to stop bitching about the high cost of gas and actually try to do something about it. E mail your Representative here https://writerep.house.gov/writerep/welcome.shtml
and your Senators here http://www.senate.gov/general/contact_information/senators_cfm.cfm
and Pres. Obama here http://www.whitehouse.gov/contact
and demand subsidies for big oil companies be ended now. And share with others if you like.
Below is an article explaining just what is going on with gas prices. Some may not like the political spin and linking Republicans to the interest of big oil. It is a fact that there are plenty of Democrats in Congress who are controlled by the oil and gas lobby, but it is the Republican Party that has blocked all attempts to repeal the subsidies for the oil and gas companies the past two years. All of Congress must be held accountable for ending these subsidies, so e mail your Rep and Senators and try to do something about this, or BOHICA every time you fill your tank.....
Nothing drives voter sentiment like the price of gas -- now averaging $3.56 a gallon, up 30 cents from the start of the year. It's already hit $4 in some places. The last time gas topped $4 was 2008.
And nothing energizes Republicans like rising energy prices. Last week House Speaker John Boehner told Republicans to take advantage of voters' looming anger over prices at the pump. On Thursday House Republicans passed a bill to expand offshore drilling and force the White House to issue a permit for the Keystone XL pipeline. The tumult prompted the Interior Department to announce on Friday expanded oil exploration in the Arctic.
If prices at the pump continue to rise, expect more gas wars.
In fact, oil prices are rising for three reasons -- none of which has to do with offshore drilling or the XL pipeline.
The first, on the supply side, is Iran's decision to cut in oil exports to Britain and France in retaliation for sanctions put in place by the EU and United States. Iran's threat to do this has been pushing up crude oil prices for weeks.
The second, on the demand side, is rising hopes for a global economic recovery -- which would mean increased oil consumption. The American economy is showing faint signs of a recovery. Europe's debt crisis appears to be easing. Greece's pending bailout deal is calming financial nerves on both sides of the Atlantic, and the Bank of England and European Central Bank are keeping rates low. At the same time, China has decided to boost its money supply to spur growth there.
Neither of these would have much effect were it not for the third reason -- overwhelming bets of hedge funds and other money managers that oil prices will rise on the basis of the first two reasons.
Speculators have pushed crude oil to $105.28 per barrel, up 35 percent since September. Brent crude, Europe's benchmark, is now $120.37 a barrel -- also worrisome because many East Coast refineries use imported oil.
Funny, I don't hear Republicans rail against speculators. Could that have anything to do with the fact that hedge funds and money managers are bankrolling the GOP as never before?
But that's okay. The gas wars may come to a screeching halt before too long, anyway. So many bets are being placed on rising oil prices that the slightest hint the speculators are wrong -- almost any sign of expanding supply or declining demand -- will set off a sharp drop in oil prices similar to the record one-day fall on May 5 of last year.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
http://www.huffingtonpost.com/rj-eskow/oil-slicks-who-benefits-f_b_1294906.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications
Anybody who doesn't believe that energy speculators can change election results might want to ask Gray Davis, the former Governor of California who was removed in a recall drive partly prompted by voter frustration over California's ongoing energy crisis. Only afterwards did we learn that the crisis was caused by speculators who backed his opponents' deregulatory agenda -- and benefited from it.
Coincidence? We report, you decide.
And anyone who doesn't believe that gas prices affect election results might want to ask former President Jimmy Carter. If the 1980 election hadn't turned out the way it did we might be living in a very different world.
Today gas prices continue to rise, despite the fact that demand for oil is lower than it's been in the last fifteen years. Are speculators affecting our fate again? That's the subject of heated technical debate, although I find the evidence very compelling. But here's something to consider: The prime suspects for oil speculation -- Goldman Sachs, the Koch Brothers, etc. -- are the people who are fighting tooth and nail to make sure government never has the power to investigate their actions.
Here's the California scenario in a nutshell: Deregulation unleashes the dogs of speculation on energy markets, driving up prices and creating scarcity. A moderate Democrat loses office as a result, turning the reins of power over to a Republican who calls for ... more deregulation.
Could it happen again?
Speculation Speculation
People keep debating the question, just as they did in 2008: Are speculators affecting oil prices? Skeptics point to the crisis in Iran and recent signs of increased demand as real-world factors that could affect prices. But end-user demand remains low.
I find the pro-speculation arguments compelling. But the professional approach to any financial question requires us to "put the 'anal' in 'analyst,'" so the most professional thing to say is: We don't know for sure. And we can't know for sure until the government gets the authority and the resources to investigate fully. (More about that in a minute.)
Here's what we do know: Oil prices rose while demand fell. Futures and other financial instruments have allowed all sorts of people to bet on the oil market, along with other commodities markets, for more than twenty years. And whenever demand and prices don't track together, something is happening that we can't see.
If prices are rising based on expectation that things will get better in the future, that suggests speculators are at work. And if they fall whenever there's a sign of an upcoming economic storm, that also suggests that prices are being driven by intermediaries who are gambling on the future rather than suppliers responding to demand.
Those intermediaries happen to be the same people who keep lobbying to make sure we don't have the ability to find out what's happening or the authority to stop it.
The Skeptics
Some of the people who reject the idea that speculators are at work are also defending a separate but related idea: That oil is a limited commodity and we're overly dependent on it. That's true, and some people are afraid that the "speculator" argument will be seen as a blank check to continue our over-reliance on oil.
But two things can be true at the same time: Speculation may be affecting the price of a commodity that will nevertheless continue to grow in direct and indirect cost, meaning that we should therefore begin reducing our dependence on it.
The Case
Why is the case for oil speculation prices so compelling? Not only is there that mysterious divergence between demand and price, but there are also convincing analyses like the one Michael Masters did which linked the last price surge to $60 billion in speculator purchases.
Twenty years ago, speculators purchased roughly 30 percent of the world's future oil deliveries. As of 2011 that number has risen to 70 percent. They wouldn't be doing it if there weren't money to be made. It's hard to believe that they would stake trillions of dollars merely on the wisdom of their educated guesses -- especially if they had the opportunity to manipulate the results instead.
You can count Goldman Sachs among the believers. Last year it issued a warning that speculation was getting out of hand and driving prices too high. Since Goldman was present at the creation of the speculation market, it has a lot of credibility on the topic. Nobody knows more about Frankenstein's monster than Dr. Frankenstein himself.
Speculation/Manipulation
Speculation is one possible cause of rising prices. Another is outright price manipulation, as took place in California.
If we have no clear proof that speculators are driving prices, that means we also lack proof of outright manipulation.
How do we get proof? There are three possible scenarios: One is that speculators are innocent of any wrongdoing, and aren't even hurting the economy. Another is that they're acting legally, but destructively, which may spur calls for new legislation. And the third is that some of them are engaged in criminal behavior.
The way to find out is through government investigation, and by strengthening the regulatory power of the appropriate agencies. But look who's blocking those actions.
Cui Bono?
As the old prosecutors used to say, Cui Bono? Who benefits? The people who would have both the motive and the opportunity to manipulate markets are the same people who are blocking real investigations.
Wall Street firms have been at the forefront of blocking even the mild financial reforms of Dodd/Frank -- reforms which include increased limits on their ability to gamble in the commodities market.
Energy distributors like the infamous Koch Brothers also have both motive and opportunity. The Koch Brothers own oil suppliers and distributors, and introduced the first oil-indexed Wall Street swap way back in 1986. As suppliers, they can influence price. As speculators, they can make a fortune.
Wall Street firms and energy distributors also happen to be pouring enormous sums of money into Washington to make sure they're never subjected to meaningful regulatory oversight. They're in bed with a number of prominent politicians, especially in the GOP. (Ten years ago they were literally "in bed" with one another, since Sen. Phil Gramm's wife was on Enron's board even as Gramm pushed the deregulation of oil speculation.)
Who else benefits from rising oil prices? Republican politicians, who have been using them all week to attack the President and Democrats in general.
Coincidence? We report, you decide. To be clear, we're not suggesting that anybody's sinking tens of billions of dollars into oil purchases just to decide this year's election. There are probably cheaper ways to purchase democracy. But if it is all coincidence, it's all working out pretty nicely for somebody.
A Populist Issue
As we said in the beginning, we can't know for sure what's behind these oil prices. But what we can know is that we don't know -- and that our government should have the resources to track these markets and intervene when they're being misused.
Some people believe the oil price boom may be ending, and that's possible. But with so much that's hidden from view, we can't know. If they continue to rise that could change the course of the upcoming election and lead the President to defeat.
Fortunately there are things he can be doing now that would greatly benefit the country, and parenthetically would also help his reelection efforts. Last year he announced an investigation into possible oil speculation, but it was underfunded and seems to have gone nowhere. The President should immediately ramp up that effort and give it real resources.
Secondly, the President should mount a strong defense for financial regulation and make the case for strong oversight of commodities trading. He can point to rising oil prices, should they occur, and tell the public that his opponents won't give him the resources he needs to handle the problem.
Third, he can point to GOP-backed moves like the amendment passed in Congress last week which would force U.S. taxpayers to keep guaranteeing big banks' speculation in oil and other markets as a sign of what this battle is really about: economic security for the many vs. government-guaranteed greed and speculation for the few.
To be sure, this latest move had "bipartisan" support, as so much dangerous deregulation has in the past. (This picture serves as a harsh reminder of Clinton-era coziness with Wall Street.) But that's exactly the kind of bipartisanship the President should reject: the bipartisanship of corporate politics.
That's a route the President would be well-advised to take. Should he? Yes. Will he? We don't know -- and we're not in the business of speculating.
We discussed oil prices last week with Thom Hartmann in his television show, The Big Picture:
and your Senators here http://www.senate.gov/general/contact_information/senators_cfm.cfm
and Pres. Obama here http://www.whitehouse.gov/contact
and demand subsidies for big oil companies be ended now. And share with others if you like.
Below is an article explaining just what is going on with gas prices. Some may not like the political spin and linking Republicans to the interest of big oil. It is a fact that there are plenty of Democrats in Congress who are controlled by the oil and gas lobby, but it is the Republican Party that has blocked all attempts to repeal the subsidies for the oil and gas companies the past two years. All of Congress must be held accountable for ending these subsidies, so e mail your Rep and Senators and try to do something about this, or BOHICA every time you fill your tank.....
Nothing drives voter sentiment like the price of gas -- now averaging $3.56 a gallon, up 30 cents from the start of the year. It's already hit $4 in some places. The last time gas topped $4 was 2008.
And nothing energizes Republicans like rising energy prices. Last week House Speaker John Boehner told Republicans to take advantage of voters' looming anger over prices at the pump. On Thursday House Republicans passed a bill to expand offshore drilling and force the White House to issue a permit for the Keystone XL pipeline. The tumult prompted the Interior Department to announce on Friday expanded oil exploration in the Arctic.
If prices at the pump continue to rise, expect more gas wars.
In fact, oil prices are rising for three reasons -- none of which has to do with offshore drilling or the XL pipeline.
The first, on the supply side, is Iran's decision to cut in oil exports to Britain and France in retaliation for sanctions put in place by the EU and United States. Iran's threat to do this has been pushing up crude oil prices for weeks.
The second, on the demand side, is rising hopes for a global economic recovery -- which would mean increased oil consumption. The American economy is showing faint signs of a recovery. Europe's debt crisis appears to be easing. Greece's pending bailout deal is calming financial nerves on both sides of the Atlantic, and the Bank of England and European Central Bank are keeping rates low. At the same time, China has decided to boost its money supply to spur growth there.
Neither of these would have much effect were it not for the third reason -- overwhelming bets of hedge funds and other money managers that oil prices will rise on the basis of the first two reasons.
Speculators have pushed crude oil to $105.28 per barrel, up 35 percent since September. Brent crude, Europe's benchmark, is now $120.37 a barrel -- also worrisome because many East Coast refineries use imported oil.
Funny, I don't hear Republicans rail against speculators. Could that have anything to do with the fact that hedge funds and money managers are bankrolling the GOP as never before?
But that's okay. The gas wars may come to a screeching halt before too long, anyway. So many bets are being placed on rising oil prices that the slightest hint the speculators are wrong -- almost any sign of expanding supply or declining demand -- will set off a sharp drop in oil prices similar to the record one-day fall on May 5 of last year.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Oil Slicks: Who Benefits From Gambling on Gas Prices?
http://www.huffingtonpost.com/rj-eskow/oil-slicks-who-benefits-f_b_1294906.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications
Anybody who doesn't believe that energy speculators can change election results might want to ask Gray Davis, the former Governor of California who was removed in a recall drive partly prompted by voter frustration over California's ongoing energy crisis. Only afterwards did we learn that the crisis was caused by speculators who backed his opponents' deregulatory agenda -- and benefited from it.
Coincidence? We report, you decide.
And anyone who doesn't believe that gas prices affect election results might want to ask former President Jimmy Carter. If the 1980 election hadn't turned out the way it did we might be living in a very different world.
Today gas prices continue to rise, despite the fact that demand for oil is lower than it's been in the last fifteen years. Are speculators affecting our fate again? That's the subject of heated technical debate, although I find the evidence very compelling. But here's something to consider: The prime suspects for oil speculation -- Goldman Sachs, the Koch Brothers, etc. -- are the people who are fighting tooth and nail to make sure government never has the power to investigate their actions.
Here's the California scenario in a nutshell: Deregulation unleashes the dogs of speculation on energy markets, driving up prices and creating scarcity. A moderate Democrat loses office as a result, turning the reins of power over to a Republican who calls for ... more deregulation.
Could it happen again?
Speculation Speculation
People keep debating the question, just as they did in 2008: Are speculators affecting oil prices? Skeptics point to the crisis in Iran and recent signs of increased demand as real-world factors that could affect prices. But end-user demand remains low.
I find the pro-speculation arguments compelling. But the professional approach to any financial question requires us to "put the 'anal' in 'analyst,'" so the most professional thing to say is: We don't know for sure. And we can't know for sure until the government gets the authority and the resources to investigate fully. (More about that in a minute.)
Here's what we do know: Oil prices rose while demand fell. Futures and other financial instruments have allowed all sorts of people to bet on the oil market, along with other commodities markets, for more than twenty years. And whenever demand and prices don't track together, something is happening that we can't see.
If prices are rising based on expectation that things will get better in the future, that suggests speculators are at work. And if they fall whenever there's a sign of an upcoming economic storm, that also suggests that prices are being driven by intermediaries who are gambling on the future rather than suppliers responding to demand.
Those intermediaries happen to be the same people who keep lobbying to make sure we don't have the ability to find out what's happening or the authority to stop it.
The Skeptics
Some of the people who reject the idea that speculators are at work are also defending a separate but related idea: That oil is a limited commodity and we're overly dependent on it. That's true, and some people are afraid that the "speculator" argument will be seen as a blank check to continue our over-reliance on oil.
But two things can be true at the same time: Speculation may be affecting the price of a commodity that will nevertheless continue to grow in direct and indirect cost, meaning that we should therefore begin reducing our dependence on it.
The Case
Why is the case for oil speculation prices so compelling? Not only is there that mysterious divergence between demand and price, but there are also convincing analyses like the one Michael Masters did which linked the last price surge to $60 billion in speculator purchases.
Twenty years ago, speculators purchased roughly 30 percent of the world's future oil deliveries. As of 2011 that number has risen to 70 percent. They wouldn't be doing it if there weren't money to be made. It's hard to believe that they would stake trillions of dollars merely on the wisdom of their educated guesses -- especially if they had the opportunity to manipulate the results instead.
You can count Goldman Sachs among the believers. Last year it issued a warning that speculation was getting out of hand and driving prices too high. Since Goldman was present at the creation of the speculation market, it has a lot of credibility on the topic. Nobody knows more about Frankenstein's monster than Dr. Frankenstein himself.
Speculation/Manipulation
Speculation is one possible cause of rising prices. Another is outright price manipulation, as took place in California.
If we have no clear proof that speculators are driving prices, that means we also lack proof of outright manipulation.
How do we get proof? There are three possible scenarios: One is that speculators are innocent of any wrongdoing, and aren't even hurting the economy. Another is that they're acting legally, but destructively, which may spur calls for new legislation. And the third is that some of them are engaged in criminal behavior.
The way to find out is through government investigation, and by strengthening the regulatory power of the appropriate agencies. But look who's blocking those actions.
Cui Bono?
As the old prosecutors used to say, Cui Bono? Who benefits? The people who would have both the motive and the opportunity to manipulate markets are the same people who are blocking real investigations.
Wall Street firms have been at the forefront of blocking even the mild financial reforms of Dodd/Frank -- reforms which include increased limits on their ability to gamble in the commodities market.
Energy distributors like the infamous Koch Brothers also have both motive and opportunity. The Koch Brothers own oil suppliers and distributors, and introduced the first oil-indexed Wall Street swap way back in 1986. As suppliers, they can influence price. As speculators, they can make a fortune.
Wall Street firms and energy distributors also happen to be pouring enormous sums of money into Washington to make sure they're never subjected to meaningful regulatory oversight. They're in bed with a number of prominent politicians, especially in the GOP. (Ten years ago they were literally "in bed" with one another, since Sen. Phil Gramm's wife was on Enron's board even as Gramm pushed the deregulation of oil speculation.)
Who else benefits from rising oil prices? Republican politicians, who have been using them all week to attack the President and Democrats in general.
Coincidence? We report, you decide. To be clear, we're not suggesting that anybody's sinking tens of billions of dollars into oil purchases just to decide this year's election. There are probably cheaper ways to purchase democracy. But if it is all coincidence, it's all working out pretty nicely for somebody.
A Populist Issue
As we said in the beginning, we can't know for sure what's behind these oil prices. But what we can know is that we don't know -- and that our government should have the resources to track these markets and intervene when they're being misused.
Some people believe the oil price boom may be ending, and that's possible. But with so much that's hidden from view, we can't know. If they continue to rise that could change the course of the upcoming election and lead the President to defeat.
Fortunately there are things he can be doing now that would greatly benefit the country, and parenthetically would also help his reelection efforts. Last year he announced an investigation into possible oil speculation, but it was underfunded and seems to have gone nowhere. The President should immediately ramp up that effort and give it real resources.
Secondly, the President should mount a strong defense for financial regulation and make the case for strong oversight of commodities trading. He can point to rising oil prices, should they occur, and tell the public that his opponents won't give him the resources he needs to handle the problem.
Third, he can point to GOP-backed moves like the amendment passed in Congress last week which would force U.S. taxpayers to keep guaranteeing big banks' speculation in oil and other markets as a sign of what this battle is really about: economic security for the many vs. government-guaranteed greed and speculation for the few.
To be sure, this latest move had "bipartisan" support, as so much dangerous deregulation has in the past. (This picture serves as a harsh reminder of Clinton-era coziness with Wall Street.) But that's exactly the kind of bipartisanship the President should reject: the bipartisanship of corporate politics.
That's a route the President would be well-advised to take. Should he? Yes. Will he? We don't know -- and we're not in the business of speculating.
We discussed oil prices last week with Thom Hartmann in his television show, The Big Picture:
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