Expert: U.S. Investment Bankers Driving Up Gas Prices, Not Middle East Tensions

Demand Is Low, But Commodities Industry Not Forced To Be Transparent

NEW YORK (CBSNewYork) — Monday marked the 20th straight day of rising prices at the pump. According to AAA, the national average is $3.70 a gallon for regular unleaded.

A month ago it cost $3.39.

If you think that’s because of a global shortage of oil or tensions in the Middle East, you may be wrong, reports CBS 2’s Don Dahler.

Israel has not attacked Iran to prevent its development of nuclear weapons.

Saudi Arabia has not cut back on oil production.

Yet the prices we’re paying at the pump are rocketing skyward, which financial analysts say will put the economic recovery at risk.

“Higher gasoline prices; lower consumer confidence. Lower consumer confidence; very bad news for our economy,” said Fadel Gheit, senior analyst at Oppenheimer & Co.

But, ironically, U.S. gasoline refineries are actually running at full capacity and exporting more gas to other countries than ever before.

The U.S. is importing an average of 800,000 barrels of gasoline per day. At the same time our exports of gasoline have increased over the past year from 200,000 to 600,000 per day.

That means consumption is down, and the U.S. is selling more domestic gasoline to other countries.

In fact, the rising gas prices have less to do with what’s happening out in the world than it does what’s happening inside places like the New York Mercantile Exchange.

Commodities traders are betting that gas prices will continue to rise. By using billions of their private equity funds and their clients’ money to buy gasoline futures, they’re pushing the price of oil even higher, which in turn makes your gallon of gasoline more expensive, even though nothing bad in the Middle East has actually happened.

Critics say speculators are capitalizing on the very fear they’re helping to generate.

“These people are making almost as much money today from trading commodities as they were making in investment banking just a few years ago. So, they are not going to unlearn how to make money. But all of us are going to pay for it,” Gheit said.

And pay, and pay. Analysts say the only way the system will change and gas prices stabilize is if the commodities industry is forced to be as transparent as the stock market. Right now, there is very little oversight of the trade in gasoline futures.

But a federal government report about the last gas price crisis in 2008 couldn’t pin the cause on excessive speculation.

Many of the same investment firms that were involved in the mortgage crisis that caused the global recession have now shifted much of their attention to commodities futures, including gasoline, with little oversight.

Please offer your thoughts in the comments section below …

  • lulu

    BP is in court denying that they destroyed the states of Alabama, Mississippi and Louisana. BP has 52 billion dollars in reserves and growing..

  • Chump Change

    Need GAS? How do you spell relief? Here’s the problem:

    The financial crisis has unveiled a new set of public villains—corrupt corporate capitalists who leveraged their connections in government for their own personal profit. During the Clinton and Bush administrations, many of these schemers were worshiped as geniuses, heroes or icons of American progress. But today we know these opportunists for what they are: Deregulatory hacks hellbent on making a profit at any cost.

  • American Worker

    Its not just gas prices . Every time gas / diesel goes up so does the price of Milk , Bread , Baby Food everything we buy moves by truck and that fuel increase is passed on to us the consumer all because greedy commodity players think there shooting dice in a Vegas Casino.
    “Many of the same investment firms that were involved in the mortgage crisis that caused the global recession have now shifted much of their attention to commodities futures including gasoline”
    Where is government regulation ? The government is busy figuring ways to cut social security , pensions , medicaid ,wages . Go after the problem the manipulating of the market on Wall Street.

  • jerseyjoey

    I have said this for years, its Wall Street and Jew bankers and greedy investors not to boot our POS Gov. ,turning energy into a commodity and listing it on the market. Now that the Jews are playing the war card with Iran, the American Jews are eating this up in the commodity markets and we the American Avg. Joe are screwed yet again by greed. I love it when the liberal left wakes up and starts to whine over things at the last minute.

    • kenny kleane

      im not even jewish and im smart enough to know how retarded you sound….

    • The Realist

      I believe the last I looked “the Christians” ran the stock market and banks. You are just looking someone to blame for the meager life you live.

      • jerseyjoey

        You do not look, you spew out what you believe in your remedial tiny mind, you just cannot stand anything Christian American, people like you are the cancer that needs to be cut away from our great society, you are either a Jew boy or a leftist liberal atheist pion, and then again you might just be a Muslim sleeper cell member.

        • Jake

          People still blame Jews for societal problems? I should leave the house more often. I miss out on all the scapegoating.

  • Romulus

    if and when the corruption stops it might be a chance to be done something about the gas price as well as the cure of cancer and others with the very cheap medication like HEMP OIL !!which in 1930 was in stores

  • rud burdler

    there has been tension in the east longer than the gas price gauging has been going on. what changed? besides the influence of big buisness on government.

  • Exxxxno

    And so the Dark face of Capitalism shows itself. Though this news isn’t really new, after all, you also have the state of Washington approving a bill to surcharge people with EVs, because they don’t have to buy gasoline. Not to mention, big oil companies own several EV patents so they can hinder the advance of alternative energy.

  • mj

    wow WHAT A SURPRISE we’re being screwed over by investment bankers . hard to believe i know .. i guess nothing will happen since they own the politicians. they don’t care about the price of gas . they are rich it doesn’t efect them. same old story

  • Wrapper

    Wall Street strikes yet again! Pure price manipulation vs actual supply-and-demand economics. Shameless greed!

  • Joel

    As a campaign promise, a certain presidential candidate who is now elected, promised that if elected, they would pass a law that would identify the speculators that bid up the oil. In other worlds, to regulate energy speculation. What happened to that promise? Right now, this promise would come in verny handy.

    • Jay

      What happened would be lobbyists and congress. Contrary to what most seem to believe in this country we do not have a dictator and very little of what either party’s presidents try to do makes it through congress.

      • Joel

        True. It also feels that the lobbyists have already gotten to the chief himself let alone congress. What is needed is the media ie. CBS to make a big stink about the promise to regulate the speculators. If this issue were to suddenly become a major issue, it could either make or break a compaign and hold the candidate accountable.

  • Decalman2009

    all everyone has to do is not buy gas for one day and i mean everyone in the country that drives and buys gas,and that also goes for lawnmower gas etc.The entire country work force would come to a screeching halt,what do you suppose would happen then?

    • Steve in Brooklyn

      People would just buy gas the next day!!

  • PETE

    We all know that!! Phony oilpurchases, etc. are driving the prices up and up. However our politicians are in the pockets of these speculators, or are speculators themselves!! They rather concentrate on our POOR mustard Muslims, or on dirty sidewalks!

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