Gas prices have gone up 34 cents per gallon in just the past 13 days, as barrels of oil trade at highs not seen in over two years. This poses a serious threat to the economic recovery — experts say prolonged high gas prices could reduce economic growth and counteract recent stimulative measures undertaken by the government.
The proximate cause for this spike is unrest in the Middle East. On January 28, in the midst of unrest in Egypt, oil prices closed $4 to $5 higher than normal, but stabilized when Egyptian President Hosni Mubarak resigned in February. The current turmoil in Libya seems to have created even more chaos in the oil markets. But one question remains unanswered — to what extent are commodity traders influencing these high gas prices? As Chris Hayes notes in The Nation, the last time gas prices spiked, in the summer of 2008, many experts concluded that Wall Street speculators, not supply and demand, created the high prices.
Last night, The Ed Show did a segment in conjunction with The Nation clearly explaining the relationship between commodity trading and gas prices, with a focus on how commodity trading could be regulated to prevent unnatural rises in fuel prices. Watch it:
As the segment notes, during the last spike in gas prices in 2008, then-candidates Obama and McCain both assailed commodity speculators and called for increased regulation. The Dodd-Frank financial regulatory reform law gave the Commodity Futures Trading Commission the power to curb “excessive speculation” by limiting the bets speculators can make, and called on the commission to do so.
Unfortunately, opposition from the commission’s Republicans — and one Democrat, Michael Dunn — has so far prevented the CFTC from acting to regulate dangerous speculation on gasoline and other commodities. But Dunn’s term is ending this summer. The White House told the Ed Show it is “vetting” replacements — but would not say if they’re looking for a nominee that favors rules to curb excessive speculation.
Will the White House choose a candidate that wants to follow the law of Dodd-Frank, and insulate gas prices from predatory Wall Street speculators? It would certainly be a much more effective way of controlling gas prices than listening to conservative cries of “Drill, Baby, Drill.”