Wall Street speculators manipulate oil prices at your expense. This speculation increases the cost of gasoline, diesel, jet fuel, heating oil and other energy products. Higher fuel prices make it more expensive to drive, travel, farm, pay utilities and ship goods. Government regulators must now implement the recently passed financial-reform law to stop rampant speculation once and for all.
What is causing the high price of fuel?
Fuel prices remain high despite the weak economy. Gasoline costs nearly the same as the days following Hurricane Katrina – even though people and companies around the world are using less fuel because of the weak economy. There is absolutely no justification for today’s inflated prices.
The only logical explanation for this disconnect in supply and demand is the rise of rampant speculation on Wall Street. Speculators buy and sell as much oil as possible to make a quick and easy profit – even though they will never use the oil that they purchase. Speculators might trade a barrel of oil more than 20 times before it is ever used – the price going up with each speculative trade, and consumers picking up the final tab. This rampant speculation reportedly increases oil prices by as much as $10 to $30 a barrel – raising the cost of nearly everything you purchase.
High energy prices have forced many families to choose from paying their heating bills, filling up on gasoline or putting food on the table. Many businesses have struggled to stay afloat and keep workers on the job because of high shipping and transportation costs. Enough is enough. It is time for Wall Street to earn its money – not get rich at your expense by recklessly gambling on oil.
How did they get away with that?
Lobbyists and special interests used their influence in Washington, D.C. to weaken regulations on oil trading. For example, in 2000, Enron convinced Congress to overhaul 60-year-old commodities rules that formerly provided checks and balances on oil speculation. This loophole allowed speculators to manipulate and potentially corner the market.
On July 21, 2010, the president signed into law historic legislation to reform Wall Street. This new law – if implemented properly – should close loopholes, improve oversight and increase transparency in the oil and commodity markets.
A federal agency called the Commodity Futures Trading Commission (CFTC) is in charge of interpreting the anti-speculation legislation to establish new regulations on oil trading, but this process could take up to a year to implement. This extra time provides Wall Street lobbyists with the opportunity to push for weak regulations. Oil speculators will continue to manipulate oil markets and influence energy prices while the CFTC debates future regulations.
What is the solution for stopping oil speculation now?
For more information about how oil speculation raises energy prices and weakens the economy, visit the following sections:
Answers to Common Questions
Research Studies
