I have been reading lately that gas prices may reach $5 a gallon in the United States this summer (yes, I hear my European readers laughing hysterically) and most people are under the impression that this is being caused by increased upset in the Mideast. But, this is not the cause; most people are not aware that gasoline is a commodity in this country and, as such, gas prices fluctuate as the result of commodity investors.
Here is an excerpt of a letter sent by several US congressman:
The Honorable Gary Gensler
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, N.W.
Washington, DC 20581
Dear Chairman Gensler,
There is strong evidence the recent surge in gas prices has little to do with the fundamental supply and demand for oil. Government data confirm that oil speculators are driving the price increase. We urge you to restore integrity to our energy markets by exercising the CFTC’s authority to require higher margin levels for speculative oil futures contracts.
Speculators are seizing on recent political turmoil in North Africa and the Middle East to drive energy prices to unwarranted levels. The Commitment of Traders Report reveals that speculators have flooded into the market in recent weeks. Since protests began in Egypt on January 25, 2011, money managers have increased their long positions in NYMEX West Texas Intermediate crude oil futures contracts by more than 35 percent, or the equivalent of 75 million barrels of oil. Oil speculators have increased long positions on the Intercontinental Exchange by nearly 50 percent. At the same time, actual true hedgers have reduced their long positions in the oil futures markets.
The loser in this game of oil speculation is the American consumer. Rising oil futures translate into higher gas prices, and that means Americans have less money in their pockets to pay for basic needs.
It's time to let our congressmen/women know that we are tired of paying more money, so a few, not so scrupulous investors, can make a huge profit. Sent an e-mail, tweet or good old fashioned snail mail to your representatives.