Wall Street Increases Gas Prices

By James Vakilpour

Gas price increase stock photo. Photo Cred:

Wall Street speculators' influence on oil prices is at least partially responsible for the record profits that have been announced this week, according to a former financial regulator.

Wall Street was gambling on gas and other commodity prices in such large quantities that it was amplifying the effects of inflationary factors like the conflict in the Ukraine. Back in May, a former employee of the Commodity Futures and Exchange Commission (CFTC) had uncovered this connection.

ExxonMobil profits alone hit a record $18.7 billion in the third quarter, according to the company's latest filing with the US Securities and Exchange Commission (SEC), while Royal Dutch Shell also reported record profits.

U.S. President Joe Biden has accused the major oil firms of price gouging in the case of high petrol prices. According to Republicans, the reason for this is that oil firms drill more.

Wall Street is the real driver of high gas prices, and it has a worldwide reach. Oil firms profit greatly from high gas costs, but they are paid for by consumers, not by the oil companies themselves. A former U.S. Commodity Futures Trading Commission official claimed in June that Democrats could reduce gas prices by 25% by simply putting Wall Street on notice with a few words. The claim was made by Michael Greenberger, who is now the director of the University of Maryland Center for Health and Homeland Security. A loophole was also discovered that allowed the largest financial institutions in the world to avoid swaps regulation and presented a threat to the entire economy. Four corporations set up paper companies abroad and then registered their swap deals via those companies, beyond the jurisdiction of the United States. Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase, and others used this loophole to skirt U.S. swaps regulations.

Commodity swaps are essentially wagers on the future direction of commodity prices. Greenberger says swap bets start to have an impact on real-world pricing when their volume begins to overwhelm that of actual, legitimate transactions of oil barrels. An increasing number of legislators and supporters concur with Greenberger’s analysis.

After a few years, it was estimated that the entire value of such uncontrolled swaps exchanges was in the hundreds of billions of dollars. The good news is that, according to Greenberger, Democratic leaders like President Biden might be able to convince banks to back off with as little as a few sentences of acknowledgement.

Gas prices dropped after it was reported that lawmakers and advocacy groups were looking into whether fracking is a good or bad thing. As Greenberger said. "banks run for cover" when they smell the "smell of regulatory and criminal investigatory" seriousness.


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