Setting the Record Straight on Gas Prices

As Americans face rising gas prices, Republicans are spouting talking points assigning blame to President Obama, instead of taking action against Wall Street speculators who are driving up the cost of oil, hurting consumers, and potentially damaging our economic recovery.

Bart Chilton, a commissioner at the Commodity Futures Trading Commission, the federal agency that regulates commodity futures and option trading in the United States, said it’s time to look at home — in addition to overseas — when searching for the reasons why gas prices are on the rise…According to Chilton, much of the problem is actually “made in the USA,” created by Wall Street traders who gamble on oil prices….By Chilton’s calculation, if you drive a car like a Honda Civic, you’re paying $7.30 more than you should every time you fill up — to Wall Street speculators. If your car is a Ford Explorer you’re paying an extra $10.41. For a Ford F150, he says owners pay an additional $14.56 per fill up -or more than $750 a year. [ABC News, 2/23]

On Tuesday, oil rose past $106 a barrel and gasoline averaged $3.57 a gallon — thanks again in no small part to rampant financial speculation on top of fears of supply disruptions… When they dominate the market, as they do, speculators’ bids can make their prophecies self-fulfilling. [McClatchy, 2/21]

Refusing to work with President Obama and Democrats to confront the problem, Republicans have consistently put the profits of their special interest friends—those same Wall Street speculators and Big Oil—first.

Republicans are protecting Wall Street speculators by pushing for dramatic cuts to the Commodity Futures Trading Commission, the agency tasked with policing price manipulation in oil markets, and introducing legislation to overturn critical oversight in the Wall Street Reform and Consumer Protection Act.

And the GOP voted over and over against efforts to bring relief to America’s taxpayers and consumers and for tax breaks for Big Oil (despite their record profits) while passing “Drill-Only” bills that do nothing to ease the pain at the pump.

Yesterday, President Obama renewed his call for an all-of-the-above approach to expanding American energy production, developing new energy sources, reducing our dependence on foreign oil, and lowering the price at the pump—and GOP spin can’t hide the facts about oil production in the United States.

More Production. In 2011, domestic crude oil production increased by 110,000 barrels per day compared to 2010—and is now at its highest level in 8 years. And natural gas production grew by the largest year‐over‐year volumetric increase in history last year. [EIA, 2/7]

Less Reliance on Foreign Oil. Overall, oil imports have been falling since 2005, and net imports as a share of total consumption declined from 57 percent in 2008 to 45 percent in 2011 – the lowest level since 1995. [White House, 2/23] In projections released last month, the EIA forecast that net petroleum imports will shrink to 36 percent of total U.S. liquid fuel consumption by 2035. That’s down from 49 percent in 2010 and well below the peak of 60 percent reached in 2005. That news came two months after the EIA reported that 2011 was likely to see the U.S. become a net exporter of petroleum products — including gasoline and jet fuel — for the first time in 62 years. [Politico, 2/23]

More Rigs. The number of rigs in U.S. oil fields has more than quad­rupled in the past three years to 1,272, according to the Baker Hughes rig count. Including those in natural gas fields, the United States now has more rigs at work than the entire rest of the world…”It’s staggering,” said Marshall Adkins, who directs energy research for the financial services firm Raymond James. “If we continue growing anywhere near that pace and keep squeezing demand out of the system, that puts you in a world where we are not importing oil in 10 years.” [Houston Chronicle, 2/19]

Cooperation on Development with Mexico. Just this week, the United States and Mexico signed an agreement to jointly cooperate on oil and gas development that cross their international maritime boundary—giving companies easier access to long unexplored reservoirs.

When it comes to energy, the Republican priority should be lowering gas prices, not raising their rhetoric. It’s time for them to join Democrats in their efforts to crack down on Wall Street speculators.