Wall Street started 2012 by ringing in the New Year for oil and gas speculators. On Tuesday, Ralph Hill, the CEO of WPX Energy Inc., rang the opening bell for the first day of trading on the New York Stock Exchange (NYSE).
The evidence of speculation’s effect on the price at the pump has piled up over the last couple of years. In 2011 especially, as gas prices hit near-record highs in the first half of the year, analysts and financial reporters explained how price increases had less to do with supply and demand than Wall Street trading.
Commissioner Bart Chilton of the Commodity Futures Trading Commission endorsed this view in a speech to the High Frequency Trading World in Amsterdam. Chilton told a room full of traders, “Researchers at Oxford, Princeton, and many other private researchers say that speculators have had an impact on prices—oil prices and food prices most notably.”
Even Goldman Sach acknowledged the impact of speculation on energy prices. In a little-publicized study conducted issued last year, the investment world’s flagship firm estimated oil prices to be $20 higher per barrel as a result of speculation.
When you consider the effect this speculation has had on the checkbooks of American families, it’s telling that the NYSE still chose an oil and gas CEO to open the new year. It can be viewed as an admission that speculators understand the role they’ve played in energy costs, and are looking forward to another banner year.
Unfortunately, that prosperity won’t be passed down to American consumers. After all, in just the first three quarters of 2011 oil and gas companies reported over $101 billion in profits. They passed cost of speculation directly on to the consumer, even though many of those companies were engaged in speculation themselves.
Meanwhile, Big Oil executives and the politicians they support fought tooth and nail to protect the billions in government handouts oil companies receive every year. For the record, many of those same politicians were far less vocal in protecting the 2 percent payroll tax cut that House Republicans held hostage at the end of the year.
If you’re looking for an explanation for their actions, you need look no further than Ralph Hill, the CEO who opened the NYSE. Before WPX Energy split off from Williams, Hill was that company’s President of Exploration and Production. During his time there, Hill gave thousands of dollars to the company’s political action committee.
That PAC turned around and funded the election campaigns of many of the politicians who over the past year have protected corporate welfare to oil companies, especially some of the key players on the House Natural Resources Committee.
No wonder these same Congressmen voted time and time again to protect special tax breaks on oil and gas subsidies, and we still don’t have legislation cracking down on oil speculators.
Wall Street continues to prove it is politically tone deaf by bringing in the very example of the 1 percent to kick-off the New Year – an oil and gas CEO whose company gets bigger profits when America’s working families are forced to pay more at the pump.