by Don Azarias
March 16, 2012
In a recent meeting with news reporters, Senate Majority Leader Harry Reid (D-Nevada) said he hoped the Federal Trade Commission (FTC) would look into rising domestic gasoline prices, noting “rampant speculation” in oil markets. “I would hope the Federal Trade Commission can help us by probing the run-up in prices,” Reid said in response to a reporter’s question about what lawmakers could do to tackle rising retail gasoline prices.
Like I’ve been saying all along in my previous columns with regard to high prices of gas, there’s no doubt that the oil market is being manipulated by those powerful oil market speculators. But are they really that powerful that the federal government, using the full force of the law, can’t even seem to stop them? Or are our so called “political leaders” in the nation’s capital, being the recipients of the largesse from those large Wall Street corporations, unwilling to do their job for fear of alienating their major campaign contributors?
As of this writing, the average U.S. retail gasoline prices is now at nearly $3.72 per gallon, up from $3.37 a year ago. The price could pass the $4.00 to $5.00 per gallon mark within days or weeks and continuing into the summer driving season that traditionally sees increase in demand for gasoline. And bear in mind that spring is still weeks away.
Meanwhile, Republicans in Congress are blaming President Barack Obama for blocking legislations involving oil production projects and domestic drilling. They are saying that we are having this problem due to our continued reliance on foreign oil. But, in fairness to Obama, even as President of the United States, he has no say when it comes to oil pricing because the U.S. economy is based on the free enterprise concept that’s inherent in a capitalistic society. Sadly, not very many people know that. The Obama administration, however, has been successful in encouraging Saudi Arabia and other members of Oil Producing and Exporting Countries (OPEC) to increase their production in order to make up for the loss of Iranian oil.
The Saudi and other OPEC members’ promise of increased production is a welcome news for the Obama’s administration that is considering tapping crude from the Strategic Petroleum Reserve (SPR) to offset the loss of Iranian oil and bring gas prices down. Treasury Secretary Timothy Geithner indicated that the White House may likely take that measure. Geithner had this to say: “Obviously Iran can do a lot of damage to the global economy. We are working very carefully to try to minimize that risk.”
From my personal point of view, releasing crude oil from the SPR is not really a good idea. The current oil crisis we are experiencing is not yet considered an emergency. Like I’ve written previously, Libya represents a mere 3 percent U.S. oil imports and we are not receiving even a drop of oil from Iran due to the embargo that we imposed on that country in 1995. There has been no sudden increase in demand for oil, nor has there been a truly significant drop in supply. And with Saudi Arabia and other OPEC members getting ready to increase oil production to make up for the loss of Iranian oil, only buttresses my belief that tapping crude oil from SPR is not really necessary. Only in time of real emergency or prolonged wars and conflicts with other countries should we turn to the SPR.
So why are oil prices going up so much? Like I said many times before, it’s because of those so called “S-P-E-C-U-L-A-T-O-R-S,” oil market speculators to be exact.
While Reid’s reason for asking the FTC to investigate the problem in gas pricing could be politically motivated, it would benefit the American consumers if it could knock off a few pennies from the prices per gallon of gasoline. But, as a member of the U.S. Congress, Reid’s move is an extraordinary one because in a free enterprise economy, the government seldom intervenes. However, in cases where manipulation of gas prices are proven to have been caused by those oil market speculators, the government can step in to launch an investigation of any wrongdoing.
It’s a fact that, in a free enterprise economy, there aren’t markets without speculation, but it’s the excessive speculation fueled by greedy investors that’s giving the system a black eye.
For the readers’ information, a free enterprise economy, like that of the United States’ is the most efficient and cost-effective way of doing business. And individuals and businesses are free to make their own economic choices. There is less waste in the usage of natural resources because everything is driven by consumer demand with little government intervention.
However, those powerful and money-hungry oil market speculators should be the ones held responsible for altering the true meaning of the free enterprise system. I truly believe that the American market system should be held to a higher standard as an honor to the Founding Fathers who had gifted it to us. They did so in order to give each individual who works hard and invests in the capitalistic economy the chance to make it big financially. And it’s sad that, due to human nature, greed will always find its way into the system. But I think what’s happening in the oil market is the price that we have to pay for having the free market concept in the United States’ economy. It’s not really a perfect concept and we have to live with the drawbacks associated with it. But I think it’s still a lot better to live under a capitalistic society than in a socialistic one.