As if the price of gasoline were not enough to make you want to cry, consider this: Every gallon you purchase includes a "speculative premium" of 56 cents that is driven by Wall Street investor activity.
The figure comes from a Democratic member of the Commodity Futures Trading Commission and was reported March 9 by theenergydaily.com. The information was quickly picked up by lawmakers, including Sen. Sherrod Brown, D-Ohio, who held a press conference on the issue Wednesday.
The speculative premium results from Wall Street traders betting on the price of gas rising as a result of political upheaval, interruptions in supplies, increased demand or refinery down time. While large consumers of petroleum, such as airlines, also speculate on pricing, the kind of speculation done on Wall Street is driven by profit.
"This is speculation by people who don't use the product," Brown said.
"It's a shame," said Bob Silleck as he filled the tank of his vehicle at a city BP station Wednesday. "It's as though (Wall Street) hasn't afflicted enough pain on us already."
Brown said that the Dodd-Frank Wall Street reform bill contained provisions that set strict limits on this kind of "excessive Wall Street betting," but the regulations have not been adopted, despite a January 2011 deadline.
"I think they are moving a little more slowly than we would like," Brown told reporters.
At an appropriations subcommittee hearing last week, Brown asked U.S. Attorney General Eric Holder about the work of the Oil and Gas Price Fraud Working Group, a task force designed to examine oil speculation. The task force was formed 11 months ago, but no findings have been reported to the public, Brown said.
The senator said high gasoline prices threaten small businesses, the economic recovery, hiring and every household's budget. Roy "Bud" Burle, a Toledo trucker, said the speculative premium adds $112 to the bill every time he fills the 200-gallon tanks on his rig.
"That extra money means whether or not I'm going to be in business," Burle said. If it were not for the fact he has no debt on his rig, Burle would be out of business because of the high cost of fuel, he said.
Despite relatively flat demand and stronger supplies than existed three years ago when gas was $1.90 a gallon, most Ashtabula-area stations are selling it for around $3.79 a gallon. Brown said demand for oil in the U.S. is at its lowest level since April 1997.
The senator is calling upon the Commodity Futures Trading Commission to do its job and clamp down on speculative oil trading. He could not say, however, if and when consumers will see relief at the pump.
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