As hedge funds push the price of oil to painful heights, Republicans are tripping over themselves to guard the status quo. Using the deficit as a ruse, they are protecting financial speculators who hold Americans hostage at the gas pump:
Congressional Republicans’ plan to cut Commodity Futures Trading Commission funding to 2008 levels would allow for manipulation of energy markets and could lead to higher U.S. oil prices, Senate Democrats said in a letter.
“At a time where gas prices are rising and squeezing American families, we have a responsibility to provide our watchdogs the resources they need to fulfill their important oversight and regulatory responsibilities,” the lawmakers wrote in a letter scheduled to be sent today to Senate Minority Leader Mitch McConnell and House Speaker John Boehner.
The proposed cuts would undermine the CFTC, which protects American consumers by “cracking down on manipulation and other market abuses,” according to the letter signed by more than 40 of the Senate’s 51 Democrats.
Currently, hedge funds and other speculators outweigh end users in the oil market by a factor of 29.
In the United States, a record 1.4 million benchmark U.S. crude oil CLc1 future contracts changed hands on the New York Mercantile Exchange (NYMEX), a spokesman for CME Group said on Wednesday, 25 percent more than the previous record set last week. Each contract is equal to 1,000 barrels.
In London, a further 1.1 million contracts traded, comprised of both U.S. crude and Brent crude oil futures -- the benchmark for much of Europe, Africa and Asia. The volume of U.S. crude oil futures traded in London was also a record for the exchange.
…"This (total) volume, representing 2.5 billion barrels of crude oil, is roughly 29 times the daily volume in the physical market," analyst Tim Evans at Citigroup said.
In prepared remarks before the Futures Industry Association's Panel Discussion: Financial Investors' Impact On Commodity Prices, CFTC commissioner Chilton cited studies documenting the role financial speculators play in the oil futures market. Here is his appearance on The Ed Show.
As Naomi Klein outlined in The Shock Doctrine, a ruthless breed of disaster capitalists are profiteering off of chaos and fear. Let us not embolden these financial terrorists with free access into our pockets.