Thursday, April 21, 2011

Who's To Blame For High Gas Prices? Is It Qaddafi? Or Mitch McConnell?


Although America doesn't buy any oil from Libya, the problems there may be adding a couple of pennies to the cost of gasoline here. But what accounts for the fact that drivers in California are looking for service stations that are only charging $4/gallon-- looking and not finding. Is there someone to blame? There sure is! On July 25, 2008 the Senate took up a cloture resolution to break the Republican filibuster on S. 3268 (Stop Excessive Energy Speculation Act of 2008), which was meant to amend the Commodity Exchange Act in order to "prevent excessive price speculation with respect to energy commodities." Only two Republicans-- Olympia Snowe and Susan Collins, both of Maine-- voted to end the Republican fillibuster. The rest of them followed Mitch McConnell's lead in making sure speculators would have the "right" to manipulate the price of oil, manipulation that we are feeling at the pumps today. Even shameless oil industry shill Mary Landrieu had to draw the line on this one and vote against the speculators. But Orrin Hatch (UT), Dick Lugar (IN), Bob Corker (TN), John Barrasso (WY) and Roger Wicker (MS) all voted to continue the filibuster. Why mention these 5 galoots? They're all up for reelection next year and even if the price of gas hit $10 a gallon they represent constituencies that would never hold them accountable for their votes anyway.

The anti-speculation bill had passed the House with overwhelming bipartisan support, 402-19, every Democrat (including even the worst Blue Dogs) plus all the Republicans except 19 deranged extremists voting YES. Among the Republicans who put the rights of speculators over the rights of consumers-- and the economic well-being of the nation-- were the current Republican candidate for the open Arizona Senate seat, Jeff Flake, as well as fellow extremists Steve King (R-IA), Marsha Blackburn (R-TN), Jerry Lewis (R-CA), Mike Pence (R-IN), Pete Sessions (R-TX), Dan Rohrabacher (R-CA) and Jeb Hensarling (R-TX).

Nevertheless, I haven't heard a peep out of the DSCC about the Republican battle to protect speculators. This is a shame, since back in 2008, they certainly understood its significance as an issue. Here's a press release the DSCC put out then against McConnell:
Senate Minority Leader Mitch McConnell voted against a bill today to lower gas prices by curbing excessive speculation in energy markets. Experts have noted that speculation is driving up the price of a barrel of oil, and a recent House committee report revealed that speculators-- institutional investors buying contracts with no intention of taking delivery of oil-- now account for 73% of all trading of crude oil contracts on the New York Mercantile Exchange, up from 37% in 2000.

"Mitch McConnell had an opportunity to lower the price of gas today, but instead he voted with the speculators who are profiting from Kentuckians' pain at the pump," DSCC spokesman Matthew Miller said. "Mitch McConnell's constituents deserve better than a politician who sides with Wall Street speculators over Kentucky families."

McConnell voted against legislation to guard against price manipulation just one day after the Commodity Futures Trading Commission announced its first case against a trading fund in the agency's probe of crude oil market manipulation. The bill will eliminate so-called "dark markets" to increase transparency and accountability in commodities trading, strengthen the CFTC's enforcement capacity, and close the "London Loophole" so all U.S.-based trading of American commodities is subject to American regulation.

Speculation is driving rising oil prices past where they should be, even with flat supply and rising demand. Economists and energy experts believe that speculation is helping drive the sudden spike in oil prices, which rose more than 50% between February and June.

Both OPEC (and the Saudis) and the White House are blaming the avarice of speculators. "The problem is," said President Obama yesterday, "is that oil is sold on these world markets, and speculators and people make various bets, and they say, you know what, we think that maybe there's a 20 percent chance that something might happen in the Middle East that might disrupt oil supply, so we're going to bet that oil is going to go up real high. And that spikes up prices significantly." Last month a dozen senators-- Sherrod Brown (D-OH), Maria Cantwell (D-WA), Barbara Boxer (D-CA), Al Franken (D-MN), Jeff Merkley (D-OR), Patty Murray (D-WA), Robert Menendez (D-NJ), Mark Begich (D-AK), Jay Rockefeller IV (D-WV), Carl Levin (D-MI), Barbara Mikulski (D-MD), and Bill Nelson (D-FL)-- called for a crackdown on the Wall Street gambling that is enriching them while draining billions out of the pockets of American consumers. They're asking the Commodity Futures Trading Commission (CFTC) to crack down on oil speculation. Cantwell has taken the lead on this and wrote that “Washington drivers are paying at the pump for reckless Wall Street oil speculation. Last year, we gave the financial cops the tools they need to rein in rampant Wall Street speculation. Today, we’re asking them to put those tools to use. It’s time for Wall Street to stop the reckless gambling on what it costs for Washingtonians to fill up their gas tanks.” She points out that the price of oil has less to do with the traditional laws of supply and demand, and more with speculators artificially inflating the price-- and perceived demand-- of oil. Since the latest round of civil unrest began late January in North Africa and then the Middle East, oil trades by speculators have jumped dramatically 35% to 50% in some markets. During that same period, U.S. gas prices have soared by almost 40%. By the way, only 8 members of Congress have gotten over a million dollars in legalistic bribes from Big Oil so far. All 8 are Republicans of course:

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At 4:39 PM, Anonymous Kevin said...

Well done post, very informative!


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