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It's not the fault of the Chinese.
It's not because of the chaos in Libya or even gluttonous Americans still glued to their SUVs.
The chief culprit in high gas prices - say financial experts and some elected officials - is the Wall Street phenomenon of speculation: financiers and investors who buy and sell futures contracts for commodities such as crude oil to make a profit. In the process, they bid up prices by creating an artificial demand.
At least two of the state's top elected officials think that rather than dipping just below $4 a gallon, the price of gas should be back around $3 a gallon.
"People are, in my opinion, getting ripped off," U.S. Rep. Joe Courtney, D-2nd District, said at a House Agriculture Committee hearing this spring on energy prices. "The markets are not functioning in a way that is connected to supply and demand."
The perils of excessive speculation in crude oil markets and what should be done about the pricing situation have been significant issues this year for Connecticut's third-term congressman from Vernon as well as for freshman U.S. Sen. Richard Blumenthal.
In speeches back home and before colleagues on Capitol Hill, Courtney and Blumenthal have called on government regulators to rein in the speculative money that they blame for inflating oil prices to unjustified levels.
Even as prices have cooled from their springtime highs - down to $96 a barrel on the New York Mercantile Exchange Friday from a peak of nearly $115 a barrel May 2 - some believe that consumers and businesses are still paying almost a $1 a gallon more at the pump than they should.
Connecticut residents face some of the highest gasoline prices in the nation because of the state's excise tax of 25 cents a gallon and a 7.53 percent gross receipts tax to each wholesale gasoline sale. Fuel prices statewide were $3.91 a gallon Friday, according to the AAA Daily Fuel Gauge Report; the national average was $3.59.
A year ago, gas sold for $2.86 a gallon in Connecticut.
On the hunt for fraud
Courtney and Blumenthal say that oil prices will stay unmoored from supply-demand fundamentals until the U.S. Commodity Futures Trading Commission steps up enforcement of existing rules and enacts new ones. They point to data showing excess oil production capacity and how U.S. consumption levels have decreased since 2007.
The federal commission is to impose new restraints on speculators as part of the Dodd-Frank reform law. Rules called "position limits" were supposed to be implemented by January, but they aren't expected to be ready until September.
However, on Thursday the commissioners voted 5-0 to approve a rule that expands the commission's ability to pursue fraud and market manipulation cases.
"This fight against oil prices is a continual battle, and we cannot be complacent just because they appear to be coming down," Blumenthal said last month as Connecticut prices dipped below $4 a gallon.
The former state attorney general helped introduce the End Excessive Oil Speculation Now Act last month with several Democrats and Sen. Bernie Sanders, I-Vermont. He also called on the Federal Trade Commission to investigate potential illegal activity in the energy markets, a step the commission says it is taking.
Out of control
Financial experts say a moderate amount of speculation helps to match buyers with sellers in commodity futures markets, where airlines, trucking companies and others lock in prices for future delivery of oil. Speculators place orders but don't take actual delivery.
Yet some economists and analysts say the speculation has gotten out of control.
"Speculators are an important part of the market, but they shouldn't be the vast majority of the market and that's what it has become," said Sean Cota, owner of the Vermont-based oil company, Cota & Cota Inc., and a member of an advisory committee to the trading commission.
A recent investigation into oil speculation by McClatchy Newspapers analyzed decades of federal commission documents. It found that big investment banks such as Goldman Sachs and J.P. Morgan Chase began to receive exemptions in the early 1990s from limits on how much banks could speculate in commodity markets.
Additional investment money poured into the futures markets with the passage of the Commodities Futures Modernization Act of 2000. McClatchy reported that oil "swaps," or the trading of delivery contracts, increased from $13 billion in the 1990s to more than $313 billion in July 2008, when oil prices peaked at over $145 a barrel.
In a stunning revelation last month, the federal trading commission's chairman, Gary Gensler, said only about 12 percent of those betting that oil prices will rise are actual so-called end-users, such as merchants. As recently as 2002, end-users were about 80 percent oil traders on the New York Mercantile Exchange and speculators made up about 20 percent, according to a study by Rice University.
And when oil was still more than $100 a barrel this spring, the chief executive officer of ExxonMobil Corp., Rex Tillerson, told the Senate Finance Committee that absent speculation and price hedging, a barrel would likely cost between $60 and $70.
In his April speech on the House floor, Courtney called on the trading commission to speed up implementation of its regulations on speculators.
"A motorist from the state of Connecticut who is now paying $4 a gallon for gas should be paying $3 a gallon," he said in his speech.
"All the speculation, which oil delivery guys and gas station owners have been screaming about for the last three months, is the factor that has been driving up the price of gas," he said.
Oil dealers hurting, too
Courtney is a member of the House Agriculture Committee, which watches over the regulation of commodities trading. During a recent trip through his eastern Connecticut district, the congressman visited Wilcox Fuel Inc. and Propane in Westbrook, a heating oil dealer.
The company vice president, John McCall, urged Courtney to go after Wall Street speculators who are making it harder for customers to afford to heat their homes.
As the typical household used 700 to 800 gallons of oil last winter, even minor drops or increases can add up.
"They (financiers) are making millions, and it's the little old lady who's crying because she can't pay her oil bill who is paying their million-dollar bonuses," McCall said.
Wilcox's president, David Foster, told the congressman that high fuel prices are a challenge for dealers as well and make business less profitable. "We've had to raise our line of credit I don't know how many times in the last year," he said.
The Obama administration placed blame on speculators for contributing to higher oil prices when it announced its decision last month to tap the nation's petroleum reserves. Officials said the extra oil would help to make up for supply disruptions caused by unrest in the Middle East and North Africa.
But some analysts say it's misguided to fault speculators for pricey oil. Growing energy demand is the real driving force, said Rayola Dougher, a senior economic adviser at the American Petroleum Institute, a trade association representing the oil and natural gas industries.
Dougher cited the continued economic expansion in Asia, and oil supplies that are under threat or have been taken offline in political hot spots such as Libya. "Even with spare capacity being up over where it was a little while ago, you can rapidly see that whittled away," she said.
On a recent weekday afternoon at Noank Shipyard, Gene Bart watched from the deck of his buddy's fishing boat as the gas pump reached $117 for 24 gallons. The price per gallon was $4.87.
The 71-year-old Newington resident explained that he sold his own boat after last boat season specifically because of rising fuel prices. "You've got a fixed income when you retire, and I just couldn't keep up with it anymore," he said.
He used to make about 30 boating trips a year, but now only goes out on friends' boats.