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Pres. Obama has unleashed a task force to examine how oil speculators are driving up the price of gas – but, he’s why they’re doing it.
Obama and the Democrats are now blaming oil speculation for the continuing surge in oil prices. Rep. Nancy Pelosi (D-Calif.) blames high gas prices on oil “speculation that can add 20 percent to the cost of a barrel of oil.”
“Supply is up. Demand is down, you would think the price would come down. Enter the speculators,” Pelosi said on March 1, 2012.
Likewise, Sen. Sherrod Brown (D-Ohio) cites “a recent report showing that excessive Wall Street betting adds a 56-cent premium to every gallon of gasoline” in his call for the government to crack down on oil speculation.
Thus, Pres. Obama says he wants Attorney General Eric Holder to "pay attention to potential speculation in the oil markets,” so he’s calling the DOJ’s speculation task force to action.
But, Obama’s stubborn refusal to approve the Keystone oil pipeline project or oil drilling permits is one of the things they’re speculating about when they drive up the cost of oil.
It’s axiomatic, really: if Obama actually wanted lower oil prices, he’d do things that would cause the price of oil to fall. Like open up the floodgates of domestic oil production.
Conversely, if speculators speculate that Obama will stand in the way of oil production, they’ll speculate that the price of oil will go up – and it will.
As JR Crooks, Editor of Commodities Essential at Black Swan Capital, explained to me:
“As it pertains to domestic energy policy, investors and speculators certainly use U.S. policy as a foundation for crude oil price direction.”
“Unfortunately, though, I’d say the piecemeal energy policy of the U.S. is actually supportive of higher prices,” Crooks says.
“The pushback on pipeline development and offshore drilling projects suppresses production. And that exacerbates the pressure on refineries responsible for the high-priced gasoline that consumers are so stressed about.”
But, Obama’s domestic energy policy isn’t the only factor speculators consider, Crooks says:
“Speculation alone is not a guilty party but rather a scapegoat to explain away uncomfortably high prices. Speculation and rising prices are mere symptoms of excess liquidity (loose monetary policy).”
“Monetary policy has created a system of endless credit and artificially low interest rates that push investors further out the risk curve. In other words, excess liquidity incentivizes speculation in inherently risky assets like crude oil.”
So, our loose monetary policy is also causing the price of oil to rise. And who, exactly, is ultimately responsible for our nation’s monetary policy?
It seems that would be the guy who oversees the Federal Reserve and picks its chairman: Pres. Obama.
And, yet, we have Pres. Obama calling an oil speculation task force to action and Sen. Brown urging the Commodities Future Trades Commission to “use its full authority under the law to crack down on excessive oil speculation.”
“We’re seeing gas prices rise long before the peak summer driving season—and excessive oil speculation is a key source of these cost spikes,” the senator says.
“We have a responsibility to ensure that the price of oil is no longer allowed to be driven up by the same Wall Street speculators who caused the devastating recession,” Brown says.
I guess that’s a job for Obama and the Democrats.
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