Monday, April 4, 2011
Why is the price of gasoline rising?
Free market ideologues would have you believe that recent gasoline price increases have to do with supply and demand. Yet a glance at the facts indicates there is no problem with supply, which recently hit a 20-year high, while demand is actually falling.
Meanwhile, open interst in gasoline futures has gone up by a factor of 18 in the past five years.
While gasoline supplies have risen and demand has fallen, open interest in gasoline on the NYMEX has increased by a factor of 18 in the past five years!! Speculators now have a claim on nearly 300 million barrels of gasoline, whereas they had practically none in 2006. And that’s just NYMEX. There’s a lot more being held in over the counter transactions.