Why Are Gas Prices So High… So Suddenly? - Part 3
We’ve recently been looking at the rapidly increasing price of oil and wondering what has brought it about. While it could be as simple as a supply and demand imbalance, there’s less than a 1.5% difference… but that didn’t suddenly happened so it’s hard to pin current events to that. In a further exploration of the issue, a guess what made that it was due more to market speculation. Seems like others are thinking the same thing.
According to a this Business Week article, institutional (big) investors have been speculating in the oil futures market. Here is some testimonial during a Congressional hearing:
Masters distinguished between traditional speculators and what he calls index speculators, or passive investors who enter the commodities markets as a long-term hedge against inflation. Commodities exchanges limit the number of positions an investor can take in the market, but Masters says the Commodity Futures Trading Commission has allowed unlimited speculation in these markets through a loophole. This so-called swaps loophole exempts investment banks like Goldman Sachs and Merrill Lynch from reporting requirements and limits on trading positions that are required of other investors. The loophole allows pension funds to enter into a swap agreement with an investment bank, which can then trade unlimited numbers of the contracts in futures markets.
It appears there are rules limiting the ability of such trading but, in their ever-increasing pursuit of quick profits, large investors have found ways around them. And while they profit, everyone else pays. Our government gets involved in so many areas “to protect us” and now, when they SHOULD have prevented these events from happening, they left a loophole open. No wonder trust in our government is very low. Sometimes, their incompetence is almost comical… but THIS is serious business.
Obviously, this activity shouldn’t be allowed.
My question is this: have you heard about THESE Congressional hearings?
Probably not. Even though this seems to point at a REAL reason why prices have skyrocketed, the only Congressional hearings most people have heard about are the ones getting all the play in the media, where oil company executives were blatantly chastised by our elected officials for making huge profits from the current situation. Congressmen railed against the companies, using the opportunity to make statements that “the people” want to hear… but had little basis in fact. Despite large dollar profits, the rate of return of their companies is not outlandish… and TAXES are almost DOUBLE their profits… but we don’t hear that in the news! Oil executives have little control over the price of oil… and failed to take the opportunity to aggressively toss the blame back at Congress for not allowing them to PRODUCE more oil domestically.
Seems like the majority of our elected officials are more interested in LOOKING GOOD ON TV rather than FINDING REAL ANSWERS to their questions.
I’m tired of the constant posturing, the self-serving rhetoric, the “business as usual” attitude, the pure party politics. I want TRUE LEADERSHIP… and it is sorely lacking.
