House Democratic Leader Nancy Pelosi went sharply after oil speculation late yesterday, taking up a strategy to answer Republicans on rising gas prices that has not been employed much in the political sphere. Take a look at Pelosi’s press release yesterday on the subject:
Gas prices have gone up about a quarter in Los Angeles in the last week. This will be the next terrain on which our politics are waged. And the facts are that domestic oil drilling has never been higher, and demand for gas in the US is at a 14-year low. So only global demand, geopolitical worries or speculation can be driving this. Global demand is certainly possible, though the entire European continent is in a recession and China is seeing slower growth, along with the low US demand. And the geopolitical situation definitely drives up prices at the moment, particularly because of Iran and the threat of a military strike, along with the oil embargo (something on which the major parties don’t really disagree).
But speculation is definitely a factor, as this McClatchy article shows.
The analysts in the piece say oil should be trading around $75 a barrel, not $106. This is pretty serious, because high gas prices have proven time and again to slow the US economy, as we don’t have a flexible enough transportation infrastructure to absorb them. The energy analysts are all saying the same thing – Wall Street speculators must share the blame for this.
But if Pelosi really wants to fight this out, she has to do what the lonely few on the Democratic side – mostly Maria Cantwell and Bernie Sanders – have been doing. She has to demand that the CFTC set position limits on speculators. Their commodity speculation rule from October was comically weak, and that had clear consequences. Maybe you can hit Republicans for cutting the CFTC budget, but ultimately it’s an executive agency that can crack down on oil speculators.
That said, I really hope this speculation idea reaches the national consciousness for once. This has been going on for years. Matt Taibbi wrote about it brilliantly in 2008, when the speculation was just as bad if not worse. There’s a place for speculation and hedging but not the majority of the market. This desperately needs to be explained to the public, and having Nancy Pelosi take a role will go a long way to actually getting some information out.
Gas prices have gone up about a quarter in Los Angeles in the last week. This will be the next terrain on which our politics are waged. And the facts are that domestic oil drilling has never been higher, and demand for gas in the US is at a 14-year low. So only global demand, geopolitical worries or speculation can be driving this. Global demand is certainly possible, though the entire European continent is in a recession and China is seeing slower growth, along with the low US demand. And the geopolitical situation definitely drives up prices at the moment, particularly because of Iran and the threat of a military strike, along with the oil embargo (something on which the major parties don’t really disagree).
But speculation is definitely a factor, as this McClatchy article shows.
The analysts in the piece say oil should be trading around $75 a barrel, not $106. This is pretty serious, because high gas prices have proven time and again to slow the US economy, as we don’t have a flexible enough transportation infrastructure to absorb them. The energy analysts are all saying the same thing – Wall Street speculators must share the blame for this.
But if Pelosi really wants to fight this out, she has to do what the lonely few on the Democratic side – mostly Maria Cantwell and Bernie Sanders – have been doing. She has to demand that the CFTC set position limits on speculators. Their commodity speculation rule from October was comically weak, and that had clear consequences. Maybe you can hit Republicans for cutting the CFTC budget, but ultimately it’s an executive agency that can crack down on oil speculators.
That said, I really hope this speculation idea reaches the national consciousness for once. This has been going on for years. Matt Taibbi wrote about it brilliantly in 2008, when the speculation was just as bad if not worse. There’s a place for speculation and hedging but not the majority of the market. This desperately needs to be explained to the public, and having Nancy Pelosi take a role will go a long way to actually getting some information out.
