And when uncertainty increases, speculation on Wall Street can drive up prices even more. Those are the short-term factors at work here.
—President Obama, March 1, 2012, Nashua, NH
Concern that excessive speculation in the oil markets is driving up prices has been an age-old argument lawmakers dust off every time gasoline prices go higher…
—National Journal, Amy Harder, March 21, 2012
The president’s policies have failed, and are making the economy worse. In January 2009, the cost of a gallon of gas was $1.87. Today, after three years of President Obama’s misguided energy policies, a gallon of gas costs $3.86. As noted by the Energy and Commerce Committee, one of the president’s very first initiatives was to cancel oil leases on onshore federal lands and to delay the offshore leasing plan, all to ultimately cancel 5 offshore leases even before Deepwater Horizon. The Obama administration’s opposition to domestic drilling continues with a 2012-2017 Offshore Lease Plan Proposal that imposes by Department of Interior actions the same moratorium voters thought was lifted in 2008. Production on federally controlled lands declined from 2010 to 2011 by 14 percent and even with sky rocketing energy costs, the president refuses to approve the Keystone XL Pipeline project.
According to the White House, the president is “directing the federal government to address a range of issues that are having a real impact on what each of us pays at the pump … For starters, he's working to prevent speculators from taking advantage of uncertainties in the commodities market and trying to reduce bottlenecks in the supply chain.”
Last April, the president directed the Attorney General to launch a task force with “rooting out cases of fraud or manipulation in the oil markets that might affect gas prices, including any illegal activity by traders and speculators.” It is obvious that President Obama and Democrats would rather blame high gas prices on Wall Street investors than look at their failed energy policies with any introspection.
On multiple occasions the federal government has performed analyses and investigations on the question of high gasoline prices being caused by supposed Wall Street investors. In most instances, the determining factors for the price of oil are proven to be fundamental supply and demand.
In fact, studies by the U.S. Energy Information Administration and the U.S. Commodity Futures Trading Commission found that medium-term and long-term price shifts are primarily a function of changes in global supply and demand.
Market participation has never proven to be a greater factor in oil price volatility than supply and demand. However, Democrats continue to argue for a causative link between high oil prices and speculation, despite the fact that increased financial market participants actually provide valuable liquidity to the market and help moderate price swings. Highly skilled in ignoring market fundamentals, Democrat conveniently prefer to make investors political scapegoats, distracting Americans from the more fundamental issues—our nation’s need to increase our domestic energy production and lessen our dependency of unstable foreign sources of energy.
For questions or further information contact Sarah Makin