Gas Pains

So gasoline prices in my area are now averaging over $4 per gallon.  Folks all over the country are hurting when they fill up, and it's natural to get angry about it.  But who to blame?

If you listen to the nightmare team trying desperately to trample each other on their way to the Republican Presidential nomination, it's of course Barack Obama's fault.  More offshore drilling!  Build the Keystone Pipeline!  Drill, baby, drill!

Heaven forbid we should look at the facts!  Oh, well, let's try:

• Even the most optomistic estimates from the George W. Bush admininstration stated that offshore drilling would have no significant effect on US oil production for at least twenty years, and even then would only lower prices by about 3 cents per gallon.
• Domestic drilling has actually quadrupled during the Obama administration, and prices are still on the rise.
• Wall Street speculation in oil futures has increased dramatically within the last decade, from about 30% of the market 10 years ago to nearly 80% today.

Coincidence?  I think not!  The Commodities market was designed to help stabilize costs for businesses that need to purchase raw materials that are subject to wild fluctuations.  But in recent years, Wall Street has been playing casino games with futures in petroleum that they have no intention of ever using.  In response to the economic crisis of the last decade, the Democratic Congress passed the Dodd-Frank bill in July of 2010.  This bill established a mechanism for reigning in this type of speculation, but enforcement has been dragging for nearly two years now.  There's actually a whole battle going on behind the scenes, and you probably never heard it reported on any news source.  Did you know that the Wall Street interests have hired Supreme Court Justice Scalia's son to represent them in limiting enforcement of Dodd-Frank?  Did you know that this battle is going on in court as I write this?

Don't get me wrong - I'm not opposed to people making money by investing.  In fact, I'm delighted that the Dow is back over 13,000 again.  My IRA is worth something again!  But by not enforcing what Dodd-Frank was designed for, the money is going right from my pocket (and yours) into a few already-well-stuffed pockets, and that's not right.  The oil companies are basically acting as a complicit middle-man, and the commodities market is being used for a purpose for which it was not intended.

Can anything be done?  Probably, but it will likely take further action by Congress.  Now let's see, who's in charge there?