Nov 5, 2007
Crude oil futures rose above 96 dollars per barrel last week. Gasoline prices crossed back over three dollars a gallon in places like Detroit and California, with other areas of the country following. Home heating oil prices are expected to rise to new heights this winter.
Analysts have been clear in pointing out that there is no good reason for the price rise. There is no shortage of supply of crude or refined oil driving up the prices.
So what’s driving up the price of crude oil? In a word: speculation.
As the housing market tanks, financial speculators are moving out and putting their money elsewhere. Hoping to get a big return on their money, they are buying “futures” contracts in commodities, especially oil.
When the big money men speculate in commodities, they don’t even touch the actual product. They just buy and sell the right to the product; they’re betting that the price will go up, and by flooding the markets with cash, they’re pushing the prices up, so they can then sell the contract. This is what happened with the housing market.
It’s what’s happened with our groceries. When the government promised grants for ethanol production, investors poured money into corn futures. This drove up the price not only of corn, but of milk, chicken and beef – because cows and chickens are fed corn.
And it’s happening now with oil, despite the fact that demand is low right now and supplies are plentiful.
Another reason for the high oil prices: inflation created by U.S. government policies. The government has inflated the money supply in order to bail out the banks who’ve lost money in the housing crunch. When the banking system locked up, the government greased the wheels with cash to get it moving into a new round of speculation, just like they bailed out the big banks and Wall Street after earlier rounds of speculation led to financial “bubbles” collapsing in 1987, 1990, 1994, 1997, 1998, 2001 and 2003.
It’s why the value of the dollar has fallen so much. The Canadian dollar is now worth more than $1.05 American, when just a year ago it was closer to 60 American cents. The Euro is now worth $1.45, when it was worth only 82 cents in 2000. When the value of the dollar drops, the prices for products produced overseas – like oil – go up, even when the products are priced in dollars, as oil is.
But our wages, of course, do not go up. So once again, we’re left paying for the gains the banks make.
We’re paying more at the pump, and at the grocery store, all because speculators want to make a quick buck – and because the government is protecting them from the consequences of their crazy speculation. The same people who created the housing crisis are now paving the way for a transportation and heating crisis.
Once again, they intend to make more money hand over fist, while making us pay their debts.
It’s about time they pay their own debts. We’ve paid way more than enough!