McClatchy: Are Wall Street Speculators Driving Up Gas Prices?

McClatchy:

Oil and gasoline prices are rising fast as Memorial Day weekend approaches, but not because supplies are tight or demand is high.

U.S. crude-oil inventories are at their highest levels in almost two decades, and demand has fallen to a 10-year low, but crude oil prices have climbed more than 70 percent since mid-January to a six-month high of $62.04 on Wednesday.

Read the whole story: McClatchy

Comments

[doublethink]

Wall st has much to do with because it trades on the nymex in U.S Dollars. They hedged gas last year and will continue to do it until they are dragged out of bed in the middle of the night and thrown into gitmo. Also the U.S Dollar is a weak fiat currency based on nothing that is being destroyed on purpose. Last week China, Russia, Brazil, and a few other countries began dumping the Dollar as a reserve currency which will further damage or federal reserve note.

[Lilith33]

They did it before...

[MirrorImage]

What ever happened to basic economics? Supply (push), Demand (pull) ? If there is demand this summer, and the oil companies are only producing at 85% and the supply is already there, then WHY O WHY does the gas prices depend on speculators?

Once again, the American people are being raped by the same folks that "we" the taxpayers bailed out! Sick of it! But what can we do? Apparently, nothing is going to stop speculators from doing what they please in order to keep them affording the lifestyle that they have become accustomed to (on the taxpayers backs).

[KillTheMessenger]

"What ever happened to basic economics? Supply (push), Demand (pull) ? If there is demand this summer, and the oil companies are only producing at 85% and the supply is already there, then WHY O WHY does the gas prices depend on speculators?"

Exactly. It doesn't. The gas price only depends on what people are willing to pay for the stuff. If they feel it's a great deal at $5/gallon, so they can drive that 6mpg RV down to Disneyland to see a miserable, minimum wage employee in a Mickey suite, again, well, then that's what gasoline is worth.

:-)

[Wendy Dyke]

they cant figure out why oil prices are going up?? DUH last year the Saudi's said it should be $50/bbl so it dropped, last month they said it should be $75/bbl so now up it goes. Always bow to your master's wishes.

[vippy]

Congress is heavily invested in oil. Did you think they will pass legislation to shoot themselves in the foot?

[angry expat]

I don't have a car so I don't care about gas prices, but...
who's the bearded cutie in the pic?

[frantaylor]

Maybe it's not such a good idea to rely on a product when people all over the world use it as an economic weapon.

[BlueDog1]

Heard yesterday big oil had a leaky faucet in Texas and at the same time a full moon with rain coming down so gas prices had to be encreased over last month.

Heck don't want to say we are getting robbed but we STILL are. Obama needs to do this industry next after banks and charge cards are complete this week.

These are the same greedy MBA's that did Wall Street and us........­..........­.....

[jordan3189]

Wait, that can't be. I thought bush and cheney drove up oil prices for their buddies. That's all i heard last year.

[BlueDog1]

I think you may have not heard it was Exxon with the mind blowing profits. You don't need to carry this one it belongs to this industry, oh wait apparently that admin. did have interest in big oil.

[jordan3189]

Let's compare bush's 1040 and obama's 1040 and see how wealthy bush got off big oil.

[loki]

Yes they are. And they will always be doing this for greed and profit until Gas and Oil prices are regulated again. American Style Capitalism is destroying America and the world. Seriously , think about it. Every single down fall of American economy has had several Ivy Greed Capitalist hat the helm. Its not working and needs to be changed fast.

[drymartini1]

How many over here in the forum understand and explain the following terms?

1) Contango (and Normal Contango)
2) Backwardation (and Normal Backwardation)
3) How the market works with Hedgers in one end and speculators in other end.

if you dont understand these 3 things, you got no business even commenting on commodities and futures market. geezus !! first make yourself informed then comment.

all these articles make the speculators look like evil. Speculators take the other side of the trade of the Hedgers. If the people need to hedge (say a producer of a commodity is worried about lower prices and needs to go short a future) who the hell will take the other side? a speculator of course.

anyways, cant explain whole topic in a post. not that i know too much either. but at least trying to keep myself informed. !!

[OpposingViewpoint]

As the price for oil rises, profits in the industry rise. As profits in the industry rise, taxes paid to the government rise. From 1977 to 2004 (sorry, the only data I had readily available), according to the Tax Foundation data, US oil companies cleared $630B after taxes while paying $518B in federal and state corporation taxes. Over the same period, an additional $1.34 trillion in excise fuel taxes was collected from consumers by the oil companies and turned over to various governments.
Additionally, many state's sales taxes are now collected as a percentage of the sale in dollars as opposed to pennies on the gallon. When gasoline increases in price, so does the state's cut in the form of taxes.
That said, the federal government is searching everywhere for revenues to fill our bankrupt coffers, so are the states. If you are anticipating any relief from the government if the form of price intervention, it's simply not going to happen. The only thing that will bring down gasoline prices is to curtail and consolidate your planned driving trips to the grocery, doctor, shopping, and recreation. Utilize mass transit where available and practical. Don't feed the beasts, the oil industry and the government. Both will only grow to be "too big to fail". Sound familiar?

[KillTheMessenger]

And last year alone we exported $500 billion to import oil. That's 4% of GDP. None of your tax numbers comes even close to describing the real problem we are having with our oil addiction. If anything we need the government to double, triple or quadruple taxes on refined products. That's the only way we can even dream about becoming energy independent.

[cjt1957]

Obama is running up the price. Crude was $60 this week. It needs to be at least $100 so his wild alt. energy statagy will get some investors.

[GeoLee]

As I understand it from something I read somewere, the oil companies and the oil pipeline companies have plenty of employees whose main jobs is to follow the market and to speculate on the price of oil and they are not necessarily housed on "Wall Street" but their tentacles reach really far. Of course they are driving up the price for profit.

[TxAggie]

Something you understand from something you read somewhere.­........So­unds real reliable. Have you also haead about the rig count, the price of crude and natural gas? It would seem those employees that heard about somewhere really aren't doing a very good job of manipulating prices.

[Cyberoptic]

Another corporation thinking it is more important than people. We need to change the law, and turn them back into tools for our good.