OK, it’s not all Glenn Beck’s Fault that you’re paying $3.40 or $3.70 or even $4.00 a gallon at the pump. But his fear-based take on democracy movements in the Middle East (oh, the caliphate!) gives cover to the speculative traders who jack up oil and gasoline prices without a trace of supply and demand reason.
The speculators are happy to repeat baseless predictions that the Suez canal could be taken over by Iran or that Libyan oilfields are endangered (even though the anti-Kadafi forces are working now to get them running as usual). Every dollar of fear-based speculation raises the take of the guys already in the oil futures market who profit from all the Armageddon chatter.
There’s reason to think Beck knows exactly what he’s doing. He both pushes and profits from the rising price of gold–which is as tight as a pea in a pod with the price of petroleum.
So Beck puts a face on the speculation that is once again driving oil markets–even as Congress aims to cut, even eliminated, funding for the agency that enforces any regulation of the speculators. While the White House tries to bolster the Commodity Futures Trading Commission, the new Congress and Majority Leader John Boehner are proposing cuts that would cripple enforcement.
It was lack of rules and lack of enforcement that allowed the price of oil to rise to nearly $150 a barrel in 2008, with gasoline over $4 a gallon. As of Monday, gasoline was at a record price for this time of year–up 20 cents in a week that is usually a low point for gasoline. But the Congressional free marketeers whose political campaigns are financed by Goldman Sachs and Exxon don’t see that as a problem. They’d rather get rid of the rules and let the economy fall as it may.
And fall it will if this keeps up. Here’s a comment from today’s early post in the Wall Street Journal on the effect of a return to $4.00 gasoline:
Mark Zandi, chief economist at Moody’s economy.com, said U.S. consumers could handle prices of near $3.25 a gallon, but will get “severe indigestion if oil rises to $125 per barrel and regular unleaded is going for closer to $4 a gallon.
“Consumers will choke and the economy will double-dip if oil surges to $150 a gallon or $4.50 a gallon for more than a few weeks,” he said. “Nothing has a more pernicious impact on the economy than higher oil prices. They act very much like a tax increase, although the money goes mostly to overseas producers.”