"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.