The Republicans will continue to defend Wall Street and speculators to no end, even if it means delivering a devastating blow to Main Street and community business across the country. Earlier today the Chicago Mercantile Exchange announced it will impose higher margins on oil trading. According to CNBC, “The CME Group raised U.S. crude oil futures margins by 25 percent as of the close of business on May 10, helping to bring prices down following a $5 a barrel spike on Monday.” On May, 10th the CME announced an increase in margins and the price of a barrel of oil dropped over 2% right away. If that’s not a sign of speculation I don’t know what is.
Margins are deposits paid by investors in futures markets, where full payment is made when contracts mature, to an exchange or clearing house to cover the risk of default by that investor and typically are based on the largest most-likely daily market move.
Last week Republican Representative Burgess from Texas stated the legislation that passed would require the U.S. government to offer up offshore areas for oil and gas leasing,” was the cause for the 10% drop in crude oil prices.
“Another area of concern already mentioned by other people on this dais is high commodity prices. Consumers across the country face higher oil and food prices. If we don’t want an economic revival to stall these prices have to come down. Good news yesterday was that oil prices did come down under a hundred dollars a barrel. What happened yesterday? Oh, the House passed a bill.”
Unfortunately by Monday oil went back up which doesn’t fair well for his conclusions. Domestic oil production is at a ten year high according to the Financial Times and the Wall Street Journal.
This definitely is not an oil supply issue. This is all about speculation. Hedge funds in last week’s commodity sell off lost billions of dollars. Hedge funds used oil as a way to increase portfolio margins, unlike airlines and trucking companies who buy into the futures markets based on their industry. But while the Republicans are still chanting drill baby drill, President Obama and many Democrats are standing up for middle class people and community businesses struggling to make ends meet. In the President’s weekly radio address, he stated:
On Thursday, my attorney general also launched a task force with just one job: rooting out cases of fraud or manipulation in the oil markets that might affect gas prices, including any illegal activity by traders and speculators. We’re going to make sure that no one is taking advantage of the American people for their own short-term gain. And another step we need to take is to finally end the $4 billion in taxpayer subsidies we give to the oil and gas companies each year. That’s $4 billion of your money going to these companies when they’re making record profits and you’re paying near record prices at the pump. It has to stop.
As usual regressives continued their defense of the Wall Street industry, all the way down to local regressive radio talk shows in Massachusetts and websites getting marching orders from a higher “power.”
The American people are not buying the regressive argument.
A new poll by Opinion Research Corporation for CNN shows that the American public, no matter what party, know that they can just follow the money to find who’s to blame. Nine out of ten Americans believe that oil companies and speculators are to blame for the recent increase in gas prices:
– 89 percent of Americans believe oil companies deserve a great deal of (61 percent) or some (27 percent) blame for the recent increase in gas prices.
– 90 percent of Americans believe Wall Street speculators deserve a great deal of (59 percent) or some (31 percent) blame for the recent increase in gas prices.
On this issue President Obama bridges ideology and party affiliation; according to the poll, Democrats, Republicans, liberals, and conservatives all believe that oil companies and speculators deserve a great deal of blame for gas prices. Only self-identified Tea Party supporters, big surprise, break with the rest of the American public, with about 40% putting the blame on Big Oil and Wall Street.