Contrary to what Obama and many Democrats want you to believe, long oil speculation actually decreases gas prices and causes price stabilization. Anyone who has a basic understand of economics and how the futures market work should be able to come to this conclusion.
When speculators bid up the future price of oil, it causes oil produces to increase production (note: this assumes bureaucrats sitting around a table in the Middle East aka OPEC aren't fixing the supply of oil for political reasons). This is basic economics, in a free market an increase in price leads to an increase in quantity supplied. When future oil prices are bid up, oil producers can produce oil that was not profitable to produce at lower prices. The oil producers will sell oil contracts at these higher prices to hedge or lock in these prices as they ramp of production. This is the purpose of the futures markets and how they work.
The price of gas at the pump is ultimately determined by where the quantity supplied falls on the demand curve. With increased supplies, this point is at a lower price. Most everyone understand this.
Oil speculators must sell every contract they buy before the delivery deadline. I do not think any of the politicians on tv complaining about oil speculation understand this. For long oil speculators to have an influence on gas at the pump, they would have to be taking delivery of oil (decreasing the supply oil at the pump). I do not think there are many oil speculators hoarding millions of barrels of oil in their backyards.
The only price manipulator is the oil market is OPEC. If Obama and these congressmen are serious about lowering oil prices they should be trying to eliminate OPEC rather than the oil speculators. Listen to any of Donald Trump interviews about OPEC:
True or not, that argument is too complicated to make a difference at the polls. Try this. The reason you're paying so much at the pump is because we are slaves to OPEC. Why are we slaves to OPEC? Because your government refuses to use decades old technology converting vehicles to NG, that's why. Limited refining capacity due to silly, politically driven policies ain't helping either.
Bottom line Mr. John Q. Public, it's your government sticking it up your ass at the pump, no one else, least not without the government facilitating it.
True or not, that argument is too complicated to make a difference at the polls. Try this. The reason you're paying so much at the pump is because we are slaves to OPEC. Why are we slaves to OPEC? Because your government refuses to use decades old technology converting vehicles to NG, that's why. Limited refining capacity due to silly, politically driven policies ain't helping either.
Bottom line Mr. John Q. Public, it's your government sticking it up your ass at the pump, no one else, least not without the government facilitating it.
"your government refuses to use decades old technology converting vehicles to NG, " Agreed you are the man!!! NG is super cheap now all time low and can be made naturally by all waste plants that we have. You would reduce deficit here by large chunk. On top of that you would have zero unemployment building cars and infrastructure in the process. Long NG!!!! down Opec!!!
Aside from the usual seasonal factors that always drive up gas prices around this time of year (people drive more in the summer) a major reason that gas is high is because we have placed sanctions on one of the major suppliers, Iran, and are trying to prevent them from selling oil to anybody. Furthermore, everybody knows this is a prelude to a shooting war, and when that happens there may well be a complete disruption of oil supplies that ship through the Persian Gulf.
Politicians cause prices to go up and then blame it on speculators. It works every time because the press and the people are stupid.
the original post doesn't take into account the problem with crude oil; we're awash in crude here in the US, what we're crunched on is refineries due to refineries closing everywhere due to lack of gasoline demand. that lack of demand for gasoline in the US, coupled with high global oil prices, make it unprofitable to run many refining operations, leading ultimately to the high gas prices we see at the pump.
