Rising oil prices have pushed gas prices above $4 per gallon in many places, inflating prices on everything from food to airfare, imperiling the fragile economic recovery. Experts have been a bit befuddled by the steep rise in gas prices this early in the year, as global oil supplies have remained steady despite unrest in the Middle East.
Among other factors, experts are increasingly concerned about the prevalence of speculators in the global oil market which may be artificially inflating prices. Speculation on energy futures, including oil, is at an all-time high, jumping 64 percent since 2008. Everyone from Goldman Sachs to Republican lawmakers have acknowledged the role of speculation in artificially driving up prices. Energies futures markets used to be the domain of companies like airlines and shippers, which appropriately use trades to hedge against price volatility, but the markets are increasingly dominated by speculators who are only interested in making profits.
On Wednesday, ThinkProgress sat down with a handful of progressive House Democrats who also warned about the increasing prevalence of oil speculation and called for doing more to address it:
REP. PETE DEFAZIO (D-OR): A member of the Commodity Futures Trading Commission said…a significant portion of what we’re paying here is due the speculation, I’m going to ask him if I can publically release his letter. … And this is a member of the commission saying this has got to stop.
REP. BRAD MILLER (D-NC): There is also, obviously, a lot of manipulation. It’s a little hard to detect it. But there actually been articles in the last couple weeks talking about the Koch Brothers, in addition to all their other good works, have been involved in oil speculation over the years. So there is an an international market that is subject to manipulation.
REP. CHELLIE PINGREE (D-ME): I still feel like speculation drives up the prices. And I would he happy to see us do more about that.
The Dodd-Frank Wall Street reform law passed last year actually calls for regulators in the Commodities Futures Trading Commission (CFTC) to crack down on speculation, but conservative commissioners have thus far blocked the implementation of the law. Meanwhile, Republicans in Congress have tried to defund and defang the CFTC, which would leave the markets at the mercy of speculators.