New Drilling And Pipelines Will Not Solve High Gas Prices

The Republicans seem to think they have a hot issue with rising gasoline prices, and for the uninformed masses out there, they may be right. The fact is every time they cry "drill baby drill!", push for the Keystone Pipeline, rail for access to the vast tracts of government land that is just waiting to be tapped, putting us on a path toward energy independence, the promises of $2.50 a gallon gas, the pledge never to bow again to a Saudi King, or the President's ineffective energy policy, just remember its all a lot of crap!


Of the 91.5 Million acres of land, on and offshore, currently leased for crude oil and gas production by Big Oil in this country, 68 Million acres of that land is currently NOT PRODUCING. Well most people would think, that doesn't make any sense? Ah, but if you're Big Oil, it makes perfect sense. Why wouldn't they utilize all this product rich territory? Because it would flood the market, and gas and oil prices would tumble. The Oil Industry, for decades now, loves to make everybody think the next energy crisis is right around the corner, or they tout huge reserves just waiting to be tapped, but government regulations are holding up the works. It is all smoke and mirrors, perpetuated by a Republican party it holds in its back pocket. Big Oil doesn't care if you pay 4,5,6 dollars a gallon for gasoline, because it makes them rich. Add a President that wants to take away their government subsides because oil giants like Exxon-Mobil made over 23 Billion dollars just last quarter. In an election year, or any year for that fact, who gets blamed for high gas prices? It's not the oil companies, it,s the President. If your an oil company dealing with a hostile President, what better way to hurt him, and the economy than rising gasoline prices. Add all the geo-political turmoil in the Middle East, and you have the perfect recipe to hurt the one man who doesn't have your interests at heart.

Ten days ago a House subcommittee held a hearing on "The American Energy Initiative" Wednesday morning that focused solely on rising pump prices. Seventy members of Congress signed a letter this week to regulators at the Commodity Futures Trading Commission (CFTC), urging immediate action on oil speculation by enacting "strong position limits" and to "utilize all authorities available to…make sure that the price of oil and gasoline reflects the fundamentals of supply and demand."

The CFTC was given authority in the Dodd-Frank Wall Street Reform and Consumer Protection Act to impose position caps on oil traders beginning in January 2011. These limits have not yet been implemented by the CFTC. In an interview Wednesday with The Daily Ticker, Sen. Bernie Sanders (I-VT) says the CFTC doesn't "have the will" to enact these limits and "needs to obey the law."

"What we need to do is…limit the amount of oil any one company can control on the oil futures market," says Sanders, who has long advocated limits on speculation. "The function of these speculators is not to use oil but to make profits from speculation, drive prices up and sell."
This is not the first time oil speculators have been blamed for higher energy prices. In 2008 U.S. oil prices skyrocketed to $145 per barrel and gasoline prices averaged well above $4 per gallon. There were calls to increase domestic offshore drilling and legislation was proposed that would have required buyers of oil to physically own and store the oil barrels. Then the 2008 financial crisis hit causing oil and gasoline prices to plummet.

Blaming the speculators may seem like scapegoating to some (namely, oil traders) but speculators control more than 80 percent of the energy futures market, up from 30 percent a decade ago, and there is mounting evidence that speculation contributes to higher prices:
•At a Senate hearing last June, Rex Tillerson, the CEO of ExxonMobil, said speculation was driving up the price of a barrel of oil by as much as 40 percent.
•A study conducted by the nonpartisan consumer advocacy group Consumer Federation of America found that speculation caused the average American household to spend an additional $600 on gasoline expenditures in 2011. Moreover, the report concluded that excessive speculation (which the organization estimated added about $30 per barrel to the cost of oil in 2011) drained the U.S. economy of more than $200 billion in consumer spending in 2011.
•The St. Louis Federal Reserve has also recommended that the CFTC do more to prevent oil speculators from driving up the price of oil. Fed officials studied the effect of oil traders on the price oil over five years and determined that "speculation contributed to around 15 percent to oil prices increases."
•CFTC Chair Gary Gensler declared last year that "huge inflows of speculative money create a self-fulfilling prophecy that drives up commodity prices." Rising gasoline prices are a huge pocketbook issue for many Americans, a reason that stands alone for politicians to focus on the role of speculators.



My Thanks to Morgan Korn at Yahoo Finance for the information regarding the CFTC and Wall Street Speculation. - MJP Bluefieldstars.