Something's fishy: Experts say price of gas should be $2 a gallon, not $404:32 PM CDT on Monday, June 23, 2008
By MIKE GOLDFEIN / WFAA-TV
WASHINGTON — Americans are furious about the high price of gas, and this isn't going to make you feel any better.
http://www.khou.com/topstories/stories/ ... 7cb6e0.jpgAP
A number of oil industry experts told a Congressional panel Monday that oil speculators are to blame for gasoline prices reaching dizzying records.
By some estimates, a gallon of unleaded regular should be priced at $2 a gallon, not $4.
Basically, the experts say, there isn't a supply problem; there's plenty of oil.
Speculators now account for 70 percent of crude oil trading on New York's commodities exchange. The price of a barrel of oil, which rose to almost $138 on Monday, does not reflect market fundamentals.
Oil analysts told the House Energy Subcommittee on Oversight and Investigations that what Americans are paying at the pump has been bid up to twice its actual value.
"We can produce oil profitably at less than half the current price levels," said Fadel Gheit, a senior oil analyst at Oppenheimer & Co.
"Today, index speculators are the 800-pound gorilla that dominates futures markets," added Michael Masters of Masters Capital Management.
In effect, people and companies with no interest in using oil have purchased vast quantities of it — on paper, at least.
One solution now being considered by lawmakers: "When you buy an oil futures contract, you should have some place to put the oil," said Rep. Michael Burgess (R-Texas).
Another response is to close loopholes that make it easier to speculate on oil.
But could regulatory measures like these work? One expert told the congressional panel it could cut the price of oil in half.
Congress is moving ahead on rules that would place limits on speculators. Some experts said the price at the pump would drop within days with tighter controls.
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People have a right to make money, but this hit us all.