Senator Sherrod Brown held a press conference at a Shell Gas Station in Independence Sunday afternoon saying that despite a new law requiring limits on excessive oil speculation by January 2011, no regulations exist yet to protect Ohio consumers from excessive Wall Street bets that can translate into high gas prices.
Brown is holding key public speaking engagements to outline how unregulated oil speculation leads to rising gas prices and hurts Ohio small businesses, truckers, and consumers alike.
The fact that speculation contributes to high gas prices is hardly a radical idea. No less an authority than Exxon Mobil’s chairman, Rex Tillerson, has acknowledged that Wall Street trading has at times been responsible for driving up prices by $30 to $40 a barrel.
Forbes recently estimated that speculation in oil futures on commodities exchanges has driven up the price of a barrel of oil by $23.39, which translates into a $.56 a gallon surcharge.
On a previous Thursday during a Senate Appropriations subcommittee hearing, Brown asked U.S. Attorney General Eric Holder about the work of the Oil and Gas Price Fraud Working Group, a task force designed to examine oil speculation. The problem is, Holder doesn’t have anything to report on the group. But the task force, which Obama initially proposed last April when a big spike in gas prices sparked public outrage, has met only four or five times, mostly around the time it was created, and has not reported to the public on its activities.
This isn’t a new development. Senator Brown’s concern is shared by many in Washington D.C., especially during a season that features such high fuel prices. Last August, Vermont independent Sen. Bernie Sanders leaked confidential data from the Commodity Futures Trading Commission to the Wall Street Journal that exposed how much Goldman Sachs, Morgan Stanley and other Wall Street speculators dominated the crude oil futures market during the April gas price increase.
What is Oil Speculation?
Oil speculation occurs when prices are driven by investor activity, rather than traditional market forces. The recently-passed Wall Street reform bill requires strict limits on speculation to have been enacted by January 2011, but no regulations yet exist to protect Ohio consumers from these risky Wall Street bets and rising gas prices. Brown will urge the CFTC to enact now-overdue regulations to protect consumers and small businesses from artificially-inflated gas prices. Mark Lyden, the president of TrueNorth Energy and the Vice Chairman of the Ohio Petroleum Marketers & Convenience Store Association, will also join Brown.
According to the Energy Information Administration, the supply of oil and gasoline is higher today than it was three years ago, when the national average price for a gallon of gasoline was just $1.90. While the national average price of gasoline is now over $3.70 a gallon, the demand for oil in the U.S. is at its lowest level since April 1997.