FOR IMMEDIATE RELEASE
April 5, 2012
CONTACT: Marvin Silver at 202-466-4282
marvin@ourfinancialsecurity.org
Experts Discuss Impact of Wall Street Speculation on Gas Prices
Today, on a national press conference call with reporters and bloggers, experts discussed the impact of Wall Street speculation on gas prices and talked about tools that government could use to reduce speculation and its costs.
Excerpt from opening by Lisa Donner, Executive Director, Americans for Financial Reform:
“With consumers paying 4 dollars a gallon at the pump, gas prices are on lots of people’s minds. High gas prices have a tremendous negative impact on the whole economy, as well as on individual households trying to fill the tank and make ends meet. Our speakers will shed light on how and why financial speculation is a very important factor in this price climb. And on the fact that there are policy steps that could help. But only if lawmakers are willing to stand up to Wall Street.
Excerpt from the remarks of Dr. Mark Cooper, Consumer Federation of America, Director of Research:
“The past decade has been a nerve wracking, budget busting, roller coaster ride for American gasoline consumers. Since January 2002, gasoline was below $2.00 per gallon for 170 weeks (54 below $1.50), it was above $3.00 per gallon for 140 weeks (77 above $3.50). Since driving, and gasoline, are basic needs of daily life in the United States, the gas pump roller coaster is wreaking havoc on household budgets. “
“Americans today are on one of the highest points in the gas price roller coaster. With West Texas Intermediate (WTI) crude oil, the benchmark for U.S. oil, at $104 per barrel, it is $30 higher than it should be. This overpriced oil is due solely to excessive speculation in commodity markets – the same problem that drove oil to $140 per barrel in 2008.”
More information from Dr. Mark Cooper here.
Excerpt from the remarks of Wallace Turbeville, Senior Fellow at Demos and former Goldman Sachs Executive:
“The people who dismiss the role of speculation in energy and food prices are either wedded to the discredited notion that unregulated markets are the answer to all problems or they are willfully ignoring the truth. The commodities markets, by design, allow buyers and sellers of oil and other commodities to see the direction that the marketplace believes prices will go over time. This is all about the perception of supply and demand, now and in the future. When Wall Street creates complex vehicles that bid up the contracts for future deliveries without regard for legitimate fundamental supply and demand data, the real world producers and consumers of oil perceive that prices are on the rise. If a producer believes that is so, it will take a higher current price to motivate him or her to part with the oil now rather than holding it for later sale. Speculation, especially speculation through highly structured vehicles designed to synthetically mimic ownership of real commodities, changes perceptions of supply and demand. This leads to a bubble which inevitably bursts when the divergence from reality becomes apparent.”
More information from Wally Turbeville here.
Excerpt from the remarks of Professor Michael Greenberger, former Director of the Division of Trading and Markets at the Commodity Futures Trading Commission:
“The answer to the heart breaking and economy breaking high gas prices is to stop by Act of Congress the roughly half trillion dollars of gambling on the upward direction of those prices by Wall Street speculators disguising those bets through the use of “commodity index swaps” and “exchange traded commodity funds.” That gambling on the upward direction of oil prices is a self-fulfilling legacy sending false demand signals to an oil market that is otherwise awash in excess oil inventory. This is not a supply/demand problem. It is a gambling problem. Congress must close down the Wall Street casinos which are unnecessarily inflating the price of gas and it must do so quickly. “
Professor Greenberger’s testimony at House Democratic Policy Committee here.
Replay Instructions:
The call lasted approximately was recorded, you can dial in to listen here:
424-203-8409
452527#
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