Excessive speculation in the oil futures market may be costing you 15 percent or more at the gas pump and playing a “significant” role in rising gasoline prices, according to a joint letter from 68 members of Congress that ABC News has obtained.
The joint letter, which cites a recently updated report by the St. Louis Federal Reserve titled “Speculation in the Oil Market,” urges immediate action by the Commodity Futures Trading Commission to install caps on the biggest traders on Wall Street, preventing them from controlling unusually large positions in the oil futures trading market.
The Reserve’s report called “Speculation in the oil market,” which was just updated in February 2012, concluded there are two main factors for large price swings at the gas pump.
It says “global demand shocks,” such as those caused by turmoil in the Middle East, “account for the largest share of oil price fluctuations.”
The report also concludes “speculation played a significant role in the oil price increase between 2004 and 2008 and its subsequent collapse. Our results support the view that the financialization process of commodity markets explains part of the recent increase in oil prices.”