Republicans have been trying to pin the blame for the recent rise in oil prices on President Obama, relying on the false claim that if Obama just allowed more drilling for oil on U.S. lands, prices would magically decline. Speaker of the House John Boehner (R-OH) has “instructed fellow Republicans to embrace the gas-pump anger” as they push for more drilling.
Many experts, though, have pointed out that its not for a lack of drilling that oil prices are increasing, but rampant speculation in oil markets. Michael Greenberger, a former regulator at the Commodity Futures Trading Commission (CFTC) who oversaw the futures markets, told McClatchy that the increase is due to “excessive speculation” on the part of Wall Street:
“It is similar to the gambling Wall Street did on whether or not people would pay their subprime (below-market rate) mortgages in the mortgage meltdown,” said Michael Greenberger, a law professor at the University of Maryland and a former federal regulator of financial markets. “Now they are betting on the upward direction of the price of oil” … “It is excessive speculation, which is a fancy word for saying that gamblers wearing Wall Street suits have taken these markets over,” he said.
Back in February, oil prices cracked $100 per barrel despite the lowest demand since 1997.
The Obama administration has said that it will crack down on excessive oil speculation, but it’s oil speculation task force has hardly done anything at all. The CFTC, meanwhile, has been slow to implement new rules designed to rein in speculators that were a part of the Dodd-Frank financial reform law. Democrats have been pushing the agency to begin that enforcement.