What's Fueling Skyrocketing Gas Prices? Ask Goldman Sachs

I saw pump prices advertised at $131.9/litre yesterday.   Lately I've developed a game for these occasions.  When I see a gas price spike I try to match it to some supply catastrophe.  Is it the Mississippi refineries hit by recent flooding?   Could it be the civil war in Libya?  Perhaps it's just another manifestation of "peak oil."

Maybe, maybe not.   Then again the real villain may not be Gaddafi but Goldman or one of the other Wall Street parasites who are making a killing gaming everything from oil to food staples and causing enormous suffering worldwide in their wake.

Enter Wikileaks.   They've released a confidential State Department cable from 2008 that sheds a lot of light on what's going on.  From McClatchey Newspapers:

When oil prices hit a record $147 a barrel in July 2008, the Bush administration leaned on Saudi Arabia to pump more crude in hopes that a flood of new crude would drive the price down. The Saudis complied, but not before warning that oil already was plentiful and that Wall Street speculation, not a shortage of oil, was driving up prices.



Saudi Oil Minister Ali al Naimi even told U.S. Ambassador Ford Fraker that the kingdom would have difficulty finding customers for the additional crude, according to an account laid out in a confidential State Department cable dated Sept. 28, 2008,

"Saudi Arabia can't just put crude out on the market ,"  the cable quotes Naimi as saying. Instead, Naimi suggested,  "speculators bore significant responsibility for the sharp increase in oil prices in the last few years , " according to the cable. 

...in the cables, Saudi officials explain that they have two primary concerns about artificially high crude prices: that they'll dampen the long-term demand for oil and that the wide price swings typical of commodity speculation make it difficult for them to plan future oil field development. After that $147 a barrel peak in 2008, for example, prices plunged to $33 a barrel as the global financial crisis rocked the world. That was a stunning change in less than half a year.

 

Today, however, speculators who'll never take possession of a barrel of oil account for that 70 percent of oil futures trading, and the volume of speculative trading has grown fivefold.


That's why the Air Transport Association, in a filing March 28 to the CFTC, called for aggressive curbs on speculators. The association complained of rapidly climbing jet fuel prices, which have outpaced the rapid climb in crude prices and have reached their highest point since September 2008, right before the near-collapse of the U.S. economy.

"At the same time, according to data recently released by the commission, speculators have increased their positions in energy markets by 64 percent compared to June 2008, bringing speculation to the highest level on record , " wrote David Berg, the airline group's chief lawyer.

 

Commodities speculation is out of control and it's causing havoc worldwide.  It has lost its economic utility and has turned parasitic, even malignant.  Unfortunately the one body that could act, America's "bought and paid for" Congress, is so in thrall to corporatist interests that it can be safely relied upon to do nothing.   And so the candle continues to burn at both ends.