By DEREK P. GILBERT
June 7, 2008
OIL FUTURES closed over $139 a barrel on the NYMEX yesterday, a new record. Last night, I received two viral emails from friends blaming Democrats and radical environmentalists for creating a shortage of oil, which in turn has created the spike in prices.
It’s a simple explanation, and it’s wrong.
The price of oil has increased faster over the last two years than at any time in American history, including the 1973-74 OPEC oil embargo. But this time, there are no lines at the gas pumps. Supplies on hand in the U.S. are at the highest level since the early 1990s.
Furthermore, there is no global shortage. Worldwide production of oil rose 2.5% in the first quarter, while worldwide demand grew by only 2%.
The problem of skyrocketing oil prices is bipartisan, and it involves culprits who aren’t even on the public’s radar. And none of the major party presidential candidates have called them out.
Unless and until the United States Congress clamps down on unregulated speculation in oil futures, we’ll continue to participate in a huge involuntary wealth transfer from those of us who rely on oil and its derivative products to those who control the trade in oil-based financial derivatives.