The cost of a gallon of regular gasoline as the long Fourth of July weekend approaches was $3.70-a-gallon nationwide. In Vermont, the average price on Wednesday was $3.74 a gallon, and the price has crossed over into the $4-a-gallon range in California, Washington state, Hawaii and Alaska. Prices haven’t been so high in July since the summer of 2008 in the months before the economy collapsed. Why? It’s not supply and demand. Supplies are up 2.4 percent since 2009. And thanks to more fuel-efficient cars and other reasons, demand is down 5 percent since 2009, when gas only cost $2.64 a gallon.
Sen. Bernie Sanders blames Wall Street oil speculators for a big part of the gasoline price hikes. On Wednesday, he discussed what’s going on during an appearance on MSNBC with Ed Schultz.
A decade or more ago, investors who wanted a reliable supply of oil – like trucking companies and airlines – made up most of the buyers in so-called oil futures market on Wall Street. Today, up to 80 percent of all oil futures are controlled by speculators who don’t really have any use for the oil, they just want to make money buying and selling the commodity. A federal regulatory agency is supposed to oversee the oil market, but the Commodity Futures Trading Commission has not reigned in speculators, as the law allows. Sanders and 20 other senators have introduced legislation that would make the commission do its job.
There really isn’t any serious debate about the role of speculators. Just a few years ago, Goldman Sachs, the huge investment bank, reported that excessive oil speculation is costing Americans 56 cents a gallon at the pump. The CEO of Exxon Mobil testified in the past that he believes excessive speculation has contributed as much as 40 percent to the price of a barrel of oil.