Sen Sanders: Who gets blame for drop in oil?

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Sen. Sanders blamed speculators for the $7.50/barrel increase in oil prices from Jan-June; Do they now get credit for the $43/barrel drop in oil prices since July? Last summer when oil prices rose by 5% during a three-week period in June partly due to instability in Iraq, Sen. Bernie Sanders once again blamed greedy energy-market traders for the rise in prices and introduced legislation in the first week of July that would allow the government to intervene in the futures markets to curb speculation on oil prices. Now that oil prices have plummeted by almost 60% since Sen. Sanders introduced his bill (see chart above), I’ll have some more editing fun below of a July news report on Sen. Sanders’s legislation (see some previous editing fun from a few months ago here): Sen. Bernie Sanders, I-Vt., introduced legislation to make federal regulators invoke emergency powers to stop speculators from using the turmoil in Iraq to the US shale boom and the slowdown in global demand to drive up down oil prices. The price of crude oil has risen fallen by more than 5 23 percent since June 12, when militants attacked and took control of several Iraqi cities, thanks in part to a nearly 500,000 barrel increase in daily domestic oil production accompanied by weak global energy demand, according to Sanders’ office. Oil prices have risen 53 fallen 42 percent since 2009 2008. “The fact is that high gasoline prices have less to do with supply and demand and more to do with Wall Street speculators driving prices up down so sharply in the energy futures and spot markets,” Sanders said in a statement. AAA reported gas is more expensive cheaper now than it has been in six four years at the beginning of the summer driving winter season. The average price of gas nationally today is $3.05 per gallon, according to GasBuddy.com, the lowest national average since December 2010. In Vermont, gas averaged $3.69 $3.29 per gallon, and in Burlington, $3.75 $3.36 per gallon - that’s about 40 cents per gallon lower than in June when Sanders introduced his bill. Speculation has help drive the price of gas at one station in Jay, VT to below $3 per gallon. Sanders’ legislation would force the Commodity Futures Trading Commission, the federal agency that regulates oil markets, to use all of its authority, including its emergency powers, to eliminate excessive oil speculation to prevent prices from falling even further. The bill is co-sponsored by 17 senators, all Democrats. Rep. Rose DeLauro, D-Conn., is introducing a companion bill in the House to stop the greedy speculators from driving down prices at the pump even further. MP: Here’s a question for Sen. Sanders and his 17 fellow Democratic sponsors: If greedy speculators were to blame for the $12 per barrel increase in oil prices during the first half of this year that motivated your anti-speculation bill in June, do oil speculators now get any of the credit for the $25 drop per barrel in oil prices over the last 4 months? And further, do we really still need your anti-speculator legislation? In Sen. Sanders’ fantasy world, I guess we are we to assume that greedy speculators only enter the futures markets when they “smell profits” from rising oil prices, but then they suddenly disappear whenever prices are falling? As if greedy traders can’t speculate just as easily on falling prices (with a short position), as they can for rising prices (with a long position)? Alternatively, I guess Sen. Sanders would have us believe that speculative trading (and not market forces) is solely (or largely) responsible for rising oil or commodity prices, but then market forces (and not speculation) suddenly take over and are responsible for falling prices? After all, greedy speculators who correctly anticipate the future direction of commodity prices can make just as much money when they correctly predict that prices will rise as they can when they correctly predict falling prices. Realistically, Sen. Sanders and his Democratic co-sponsors can’t have it both ways. If speculators are to blame for rising oil prices, they have to also get the credit for falling prices. In that case, we and Congress should be celebrating and thanking the speculators for the recent drop in oil and gas prices that will save consumers collectively about $100 billion over the next year.

Sen Sanders: Who gets blame for drop in oil?