On a sultry late June day in 2008, the price for a gallon of gas is to be found in the range of $4-$5 and even more for Diesel. Prices have risen astronomically in the last year to two and on a steady uptick since the beginning of George Bush's ascent to the White House. Individuals and government agencies alike have had to drastically reconfigure their budgets due to the cost of fuel. Well there is an answer to the mess, but only if Congress has the guts to do something about the main reason behind the exponential rise, oil speculators.
From MarketWatch:
Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135.Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters' assessment at a hearing on proposed legislation to limit speculation in futures markets.Krapels said that it wouldn't even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets."Record oil prices are inflated by speculation and not justified by market fundamentals," according to Gheit. "Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel."
Sure, there was opposition to this view, but what would you expect from the majority of speculators? Why would you give up a good thing...and no, morality does not figure into the minds of brute capitalists. It just doesn't happen, the competition is too fierce. The long-term rise in oil has been steadily going up and $60 a barrel is far more reasonable and makes sense for where the price should be. Prices will rise as demand increases and the supplies begin to taper off, but the volatility is market-based and not due to real-world conditions in oil fields and worldwide demand.
Congressman Dingell sounded willing to consider capping the speculators and putting an end to their heartless practices in the oil market. If a bill could get out of committee, onto the floor and passed in both Houses, the President could be pressured to act before the August recess. Then again, pigs may fly and the Earth could spin the other way, but there is no harm in mentioning that there is another way.
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