06/22/2010 05:12 am ET Updated May 25, 2011

The Wall Street Obama Is Visiting Today Is OPEC's Hand Maiden and America Pays the Price

The price of gasoline has risen by over 20 cents per gallon these past few weeks, with crude oil prices topping $85 per barrel. All the while oil stocks are overflowing at near record levels.

Why? OPEC is willfully manipulating the oil market and Wall Street Banks -- JP Morgan Chase, Morgan Stanley, and Goldman Sachs -- are using their official designation as bank holding companies to access cheap money from the Federal Reserve and a myriad of other programs, like federally insured deposits, to play casino with one of the core commodities of our economy.

They have become the kindred spirits of the Organization of Petroleum Countries (OPEC) cartel, sharing its objectives to pushing prices ever higher. Their trading activities have become a key function of the speculative excess that determines pricing in the oil market. By way of simple contrast, consider the pricing of natural gas, which is not anchored nor backstopped by the machinations of an export cartel the likes of OPEC. Natural gas prices have been declining steadily in the face of a condition of oversupply not much different than the oversupply currently prevailing in the oil market. Yet OPEC has given the banks the comfort margin that is clearly missing in the natural gas market, permitting proprietary trading in vast dimension in the full knowledge that their risk of steep declines is minimized by the OPEC cartels collusive policies. Policies that would underpin the price of oil even under the most extenuating circumstances.

The question becomes in large measure analogous to the current imbroglio attaining to Goldman Sachs and Wall Street generally which focuses on creation of synthetic collateralized debt obligations (CDO's). How do they functionally serve capital markets and what is their societal purpose?

In essence the same questions could apply to those banks trading oil futures on a proprietary basis (that is, for their own account and risk) with funds made available to them by government agencies that are meant in essence to assist the pursuit of vital and legitimate commercial banking purposes and to facilitate the functioning of capital markets? Is it appropriate for these banks with access to such funding to unabashedly gamble, in casino style, on the ups and downs of the oil market?

Is it reasonable to allow bank holding companies, entities that are neither consumers nor producers of crude oil, to access this funding given their sole purpose in their massive proprietary trading is to drive the market to levels that maximize their profits? What societal gain is served? More to the point, it is the end consumer of oil products who pays, collectively in billions upon billions -- in higher prices for gasoline, fuel oil, heating oil and on.

For the oil interests to hide behind the veil of "higher prices are a boon to the environment because they mean less consumption" is a canard. Government policies should address the needed steps toward lower consumption, not the transfer of billions to the oil companies and their allies on Wall Street. Perversely the banks, by flooding the oil market with liquidity, are spiking oil prices to their own benefit and to the benefit of their kindred spirits at OPEC. It is time the casino on Wall Street comes to a halt, especially since we are in large measure supplying the chips and left to cleaning up the mess after the boy's night out.