Wall Street Oil Speculators Hurt Families, U.S. Economy

Fri, Oct 14, 2011 at 12:36 am

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Wall Street Oil Speculators Hurt Families, U.S. Economy

OilWatchdog and other critics of commodity speculation have long said that rampant speculation in oil futures markets  has hurt families, cost jobs and kept the U.S. economy teetering on the edge of recession. Energy analyst Marc Cooper of the Consumer Federation of America, in a nailed-down new study. finds that speculators are adding about $600 to  the average family’s annual gasoline tab, even as unemployment stays far above normal and gasoline consumption well below average.

Cooper says:

By building on analyses and testimony offered by the Consumer Federation of America during the rapid expansion of oil commodity market trading and the escalation of price in the mid-2000s, the paper shows that excessive speculation, not market fundamentals caused the spike in oil prices. The movement of trading and prices in the three years since the speculative bubble in oil burst in 2008 provides even stronger evidence that excessive speculation is a major problem that afflicts the oil market and the economy. …

Failing to provide effective oversight of speculation, policy makers allowed the enrichment of Wall Street speculators through financialization of commodities like oil, at the expense of the real economy on Main Street.

The Consumer Fed study concludes that the gambling of market speculators adds about $30 to the average price of a 42-gallon barrel of oil, now hovering near $85 in the U.S. That translates to nearly $1 a gallon, once  refining and financial carrying costs are added in. Think what the costs are to truckers, railroads and airlines, as well as farmers and manufacturers.

Yet our regulators, specifically the federal Commodity Futures Trading Commission, have been so cowed by financial lobbyists that they have endlessly delayed  regulations that would begin to halt excessive speculation. A vote on key regulations is scheduled for Tuesday Oct. 18, and the 5-member CFTC board now reportedly has three votes to pass them.

Main Street can’t wait much longer.

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This post was written by:

Judy Dugan

- who has written 655 posts on Oil Watchdog.

Judy Dugan concentrates as an advocate on health care reforms, oil industry issues and telecommunications. She also writes and edits foundation publications and conducts media outreach.

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4 Responses to “Wall Street Oil Speculators Hurt Families, U.S. Economy”

  1. Earl Richards Says:

    OPEC, Libya and the laws of supply and demand are not responsible for high gasoline and oil prices. The oil price is dictated by the fraudulent “round-trip” trades of the “dark pool” trading in the Intercontinental Exchange (ICE) in Atlanta. The international Big Oil/big banking cabal, or an international gang of criminals, owns ICE. ICE operates outside of US law. The Commodity Futures Trading Commission has no jurisdiction over ICE, influenced by Big Oil. ICE’s energy traders and speculators can ratchet-up the oil price anytime they feel like it, for their own profits and on the behalf of Big Oil, through the use of “round-trip” trades. Google the “Global Oil Scam” and the “London-Dubai Loophole.” “Paper oil” and the crude oil futures markets have to be done away with. Over 75% of the crude oil futures trades take place in the ICE. Oil is too critical a resource to be controlled and manipulated by greedy corporations, greedy refiners, greedy speculators and greedy traders. To obtain a fair oil price, Senator Sanders has to investigate ICE, and seize, immediately the trading records of ICE, before they are destroyed.

    Reply

  2. Paul Baughman Says:

    Quote>”A vote on key regulations is scheduled for Tuesday Oct. 18, and the 5-member CFTC board now reportedly has three votes to pass them.”

    Anyone know what the vote was?

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    • Judy Dugan Says:

      Hi, Paul
      The vote was 3-2 along party lines, for a version even weaker than the original proposal, i.e. allowing up to 25% market control in long contracts. Also might not go into effect until 2013. But possibly better than nothing.

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  3. Greyfox Says:

    Why doesn’t Congress force the CFTC to do it’s mandated job. Why, because city, county, state, and the federal governments use their retirement penion funds to invest, through hedge funds, in crude and fuel markets while the nation is held hostage. The rapping and pillaging of this nation is of no concern of our (there’s a misnomer)congressmen.

    U.S. congress has been lax in enforcing existing racketeering laws related crude & fuel price manipulation, laws and regulations such as the RICO Law of 1932, the Hubbs Anti-Racketeering Act of 1946, the Sherman Act, and the Anti Trust laws to name a few to stop speculation spikes from pushing crude, fuel, food, healthcare markets to the point that everyday they increase the danger of another collapse of the worlds economies …… and the CFTC, well it still can’t make up it’s mind as to who’s side their playing on.

    It wasn’t that long ago, in 2008 the consumer was being faced with making life changing decisions as a result of untethered speculation in crude and fuel prices. The choices were; to buy fuel to get to & from work, or buy heating oil to heat the home, or putting food on the family table, or paying the home mortgage. What happened is that carrying a mortgage became a rich man’s luxury that millions of American families could no longer afford, yet the U’S. Congress continues to this day to set on it’s hands and do nothing to stop the pillaging of the American economy by hedge fund groups the likes of J.P.Morgan, Citigroup, Chase, and Goldman Sachs, and dozens more. During 2008 one hedge fund manager, and we all know who that was, made an income of $3,000,000,000 at $900,000 an hour trading crude, fuels, and gold futures, and at the same time shorting those same markets, knowing that it was just a matter of time before even a strongest economy could not support the never ending rise of crude and fuel prices. Goldman Sachs has spent over three billion in legal fees & fines in just the last three years on fraud changes. Two months ago

    http://www.reuters.com/article/2011/08/22/us-goldman-blankfein-idUSTRE77L5VK20110822

    Lloyd Blankfein has hired the largest legal gun in Washington as his legal defense council on more upcoming charges of fraud, and still crude and fuel prices continue to rise to historic highs …… and it’s 99% of America that continues to live from the dirty end of the stick?

    We don’t need more congressional platitudes, we need honest people in congress. How many of us can run for congress? Because honesty isn’t the

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