Silly Senators, Speculation Is For the Fed
Oh those poor speculators, always getting blamed when folks don't know who else to blame. Personally, I imagine part of the spike in gas prices has to do more with the ethanol subsidies that dried up as of January 1st but I'm no senator, I could be way off on that one.
Excessive speculation in the oil futures market may be costing you 15 percent or more at the gas pump and playing a "significant" role in rising gasoline prices, according to a joint letter from 68 members of Congress that ABC News has obtained.
The joint letter, which cites a recently updated report by the St. Louis Federal Reserve titled "Speculation in the Oil Market," urges immediate action by the Commodity Futures Trading Commission to install caps on the biggest traders on Wall Street, preventing them from controlling unusually large positions in the oil futures trading market.
Here's the funny part, the senators actually believe the Fed report that blames speculation for higher gas prices. Of course the Fed would want you to believe that speculators are to blame, why on Earth would they take responsibility for this? Seems common sense to me: oil priced in dollars, Fed ruining the dollar, how difficult is this equation to assemble?
The report also concludes "speculation played a significant role in the oil price increase between 2004 and 2008 and its subsequent collapse. Our results support the view that the financialization process of commodity markets explains part of the recent increase in oil prices."
The Federal Reserve paper also puts a price on how much extra consumers may have had to pay at the pump during the Federal Reserve's five-year study period, saying, "speculation contributed around 15 percent to oil price increases" during the five year period analyzed.
Sen. Bernie Sanders, an Independent from Vermont, has pushed for reform on Wall Street for years. He says the Federal Reserve report is significant.
"If the St. Louis Federal Reserve, a conservative institution, is saying speculation is contributing significantly to the high price of oil and gas at the pump, then I think that is clearly what the case is," he said.
Here's the full St. Louis Fed report if you're interested in lining your cat litter boxes with it like I am.
With so many unemployed, how could demand be high enough to warrant these prices? Well it can't, obviously. So what else could possibly be driving them up? With Ghaddafi dead, it's not like we can blame Middle East tensions (though that won't stop them from trying, I'm sure).
Seems totally clear to me.