"At a time, in short, when sacrifice is being asked of everyone... the American people are going to find it hard, as I do, to accept a situation in which a tiny handful of steel executives... could act with such utter contempt for the interests of 180 million Americans." (John F Kennedy, opening remarks on the "Steel Crisis", 1962)
A month ago, I reminded everyone that ExxonMobil's CEO, Rex Tillerson, told Senator Maria Cantwell (D-WA) at a Senate Commerce Committee hearing that the oil would be about $60-70/barrel if the speculators in oil futures were not driving up the price. (See the linked article for the testimony, and the link to the hearing itself).
A few days ago, former Labor Secretary Robert Reich picked up the same theme, pointing out that the oil speculators had gone to court to get a stay against regulating their activities.
That is, Wall Street is playing hardball, driving more and more of your money into their pockets.
Every time a Honda Civic owner fills his tank, he hands $7.30 to Wall Street. A Ford Explorer driver is even more "generous" -- she provides them with a cool $10.41.
One should also note that these higher prices, caused by speculators, play right into the hands of Russian "President" Vladimir Putin who benefits from the high oil prices, and Iran itself. Has anyone ever wondered why Iran keeps announcing its nuclear progress to the world, or threatens the Straight of Hormuz -- every time it does, the price of oil is driven higher by speculators even in the face of higher supplies and weak demand.
Secretary Reich reminds us that, historically, 30 percent of oil futures' trades were conducted by speculators -- today, that number is 64 percent, and it is a relatively small group of traders.
There is a long history in the U.S. of taxing "bad" things -- e.g., cigarettes and alcohol -- so that society can recover some of the costs of the consequences of those indulgences, and with an intent to reduce their use.
To stop Wall Street from playing hardball with your hard-earned money, we should enact a 70 percent tax on profits from oil speculator transactions. Note, this is not a tax on oil itself or even on oil companies. It is a tax on speculative profits made on Wall Street trading desks.
Those participants -- e.g., oil companies themselves, airlines, and so forth -- who have a legitimate interest in hedging the prices they receive or pay for oil should be exempt. But, the speculators should be taxed, and taxed at a high rate.
The tax would reduce the net returns, but not the risk, of oil speculation and thus would lead to a reduction of the speculation-driven high prices for oil, and gasoline. Instead of the money going into the speculators' coffers, families could use it to buy needed goods and services and spur economic growth.
To make the tax even more politically achievable, all the revenues should be dedicated to debt reduction.
The President and Democratic Congressional leaders should propose this... now. This is a winning issue -- for the American people, for the economy, and for the President and Democrats. The fight itself exposes the real causes of the high and rising gas prices, and will put into stark relief the differences between those who are fighting to get prices down and those who attack the prices but not the real culprits.
Let Republicans, if they dare, coddle the oil speculators... and serve Putin's and Iran's interests at the same time.
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Greed knows no party line. This should not be another division between Republicans and Democrats but should be people like you and I against people like Gerry Altilio, Jr.
Gas will below $2/gallon within a year...
speculators have been from time immemorial an important part of EVERY market and, in the long run, reduce costs for everyone...because the added liquidity means tighter spreads (i.e. trading costs)
should we ban speculators from equities, bonds, real estate, etc? well then transaction costs would go up in all of them...not to mention that it's extremely hard to draw a bright line between who's a speculator and who has a strategic interest (i.e. what if a 'strategic' Exxon trader has only 30M barrels of strategic hedges, but also decided to trade 70M more? someone's going to enforce against that?)
and speculators can go short too --- their goal is simply to forecast where a market is headed and take a position, so when they go short and lower prices 'below' fair value, will the author similarly want them out?
the ppl crying about speculators are just using misdirection to get the heat off themselves (i.e. Exxon) or ppl who don't understand the issue and would rather use a nice bumper sticker like 'tax speculation'
They'll just blame "the other guy" and keep rationalizing and justifying their idiot behavior until World War III erupts and then after 100,000 Americans survive they'll go out and drive around in their SUV big wheels and claim victory. Everyone else will be gone from nuclear fall out and uninhabitable environments.
You think you'll survive ? Nope. Just the super rich. Now you know why they want to be rich.
Believe in the future of all Americans ? or just yours and your family ? Let me guess, your a Christian riiiight ?
Big Oil AND speculators make money if the price of a barrel fluctuates up and down periodically and they can "predict" (or manipulate) the timing of that motion.
Restricting American investment profit into a realtively free market of financial trading is not going to effect the price significantly enough to reduce the price of gasoline at the retail pump and offset the Rightwing outrage (fake or not) over the effort. It will just reduce revenue in a segment of our economy. Other world investors will gobble up the vacancy.
Americans feel entitled to $2.50/gallon. Some people feel they should never have to buy baseball tickets for $250 a seat near the dugout. I sometimes feel I should have been born rich and that I'd like a harem. Get over yourselves.
You want cheap energy ? Vote for a Liberal and DEMAND they replace fossil fuel. AND STOP BUYING HUMMERS.
http://www.aaa.asn.au/issues/petrol.htm
Someone obviously thinks the Democrats (as if the Republicans would do this to their prime constituency) are actually interested in serving the best interests of the broader economy, or anyone underneath the top income percentile.
Obviously, only more time and further experience will disavow such silly notions...