How Wall Street Drives Up Gas Prices -- Ripping Us Off and Killing Jobs

[xchrom]

http://www.alternet.org/news/155193/how_wall_street_drives_up_gas_prices_--_ripping_us_off_and_killing_jobs/

Gasoline prices have been falling in recent weeks, but they're still close to their five-year high after climbing steeply for three years. For every penny increase at the pump, $1.4 billion per year leaves our collective pockets, creating a drag on the sluggish “recovery.” Where does it go and what caused the price explosion at the pump?

It's a common belief that oil prices are set on the world market by supply and demand. Less supply and/or more demand causes prices to rise. Oil is getting harder to find; OPEC is holding back supply; China and India are guzzling it up; Iran is threatening to blow it up. And regulations are getting in the way of drill, baby, drill -- end of story.

But this fixation on blind market forces ignores the fact that Wall Street is financializing the commodities markets – especially oil – as it seeks new ways to pick our pockets. The same greedy swindlers who puffed up the housing bubble and then milked it dry are now hard at work doing the same with gasoline.

What is financialization and why is it coming to the oil industry?

Here’s a chilling definition provided by economist Thomas I. Palley (PDF):

Financialization is a process whereby financial markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes…..Its principal impacts are to (1) elevate the significance of the financial sector relative to the real sector, (2) transfer income from the real sector to the financial sector, and (3) increase income inequality and contribute to wage stagnation.

[liberal N proud]

1. Speculation fuels high gas prices.

[enough]

2. k&r (nt)

[BlueToTheBone]

3. What would happen if all the markets went away?

Would life go on with real economic forces working or would we really all fall down dead? It seems the Kock Bros would have a bad day, but would you and I? Would the food really go away? Would our apartments or houses vanish? Our cars turn to pumpkins?

[just1voice]

4. Excellent point made in the article:

"A look at the top 20 speculators reveals that only five are actually involved in producing, shipping, refining and consuming oil (Vitol, CMA, ENA, Semgroup and Emirates Oil). The other 15 are banks and investment houses – a virtual who’s who of Wall Street firms that puffed up the housing bubble and took down the economy. Goldman Sachs, Morgan Stanley, JP Morgan Chase, Merrill Lynch, Citigroup -- they all make the list."

There are still so many millions of people who seen incapable of understanding that simple fact and who still think supply and demand drive prices: they don't, deregulated banks drive prices in our corrupt system.