Gas Prices Rise, Time to Blame the Speculators

Nicolas Loris / July 28, 2009

The national gas price average is $2.51 for July 28, 2009, far less than the $3.96 it was one year ago to this date, but still high enough to make you groan as you wait for a seemingly-endless long time for that click of the pump, letting you know your tank is full. And, just like every other time gas prices increase to uncomfortable levels, people are passing the buck to oil speculators. From the Wall Street Journal:

The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices — a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on “deeply flawed data,” Bart Chilton, one of four CFTC commissioners, said in an interview Monday.

The CFTC’s new review, due to be released in August, adds fuel to a growing debate over financial investors who bet on the direction of commodities prices by buying contracts tied to indexes. These speculators have invested hundreds of billions of dollars in contracts that were once dominated by producers and consumers who sought to hedge against oil-market volatility. (more…)