Tue, 9 Oct 12 at 18:45 | No Comments Yet
Of course, Europeans think that’s cheap
Pump prices are skyrocketing in California: motorists there are now paying an average $4.67, which is a state record and currently the nation’s highest. So Americans everywhere have one burning question: Who’s to blame?
Conveniently, an international regulatory body called the International Organization of Securities Commissions has just released a two-year study of the oil markets. It turns out that participants have been freely manipulating oil prices:
In recent years U.S. regulators have settled a number of cases with companies accused of manipulating commodity prices, with traders allegedly submitting fake data in a secretive market to influence a benchmark price.
Sound familiar? Oil’s price-reporting mechanism resembles the flawed process that led to the scandal over the London interbank offered rate, or Libor. That system is now being overhauled, with banks certain to lose the power to set Libor among themselves.
Not so for the oil market …
Sadly the IOSC, having found that the market is basically a toy in the hands of industry and hedge fund speculators, proposes nothing that would actually solve the problem. Like, say, stricter oversight and maybe even
But lest you think they’re going too lightly, they also say that, “If, after 18 months, regulators find that the new principles haven’t been followed, further action might ensue.”
Now that will have them quivering.
There’s little question that, long term, oil prices are going to rise and rise and keep rising. Too many people in the world, too many cars, and reserves running out. Even optimists concede the point: continuing technological improvements will undoubtedly improve our ability to extract oil from difficult sources, but those improvements cost money. We may not run out of oil, but we’re certainly running out of cheap oil.
That said, there seems little reason to enrich the speculators on our way there. And drivers are suffering:
“This is unbelievable,” said Laura Fiene, 52, after spending $88.20 to fill up her 2012 Mercedes at a station in San Francisco, where regular unleaded was $4.79 a gallon.
Gosh, that’s terrible! Almost a hundred bucks for … hey, wait a minute. A 2012 Mercedes?? She can afford a brand-new German luxury car, and she’s complaining about what might as well be pocket change?
She needs to talk to some of those speculators.