Historically, oil has been afflicted with the control of monopolists. From the late nineteenth century days of John D. Rockefeller, and his Standard Oil monopoly, to the emergence of the "Seven Sisters" oligopoly, made up of Standard Oil, Shell, BP, Texaco, Mobil, Gulf and Socal, to the rise of OPEC representing the major producing countries, the "free market" price of oil has been a mirage. Despite the breakup of the Standard Oil company by the government's trustbusters about 100 years ago, selling cartels and buying oligopolies kept reasserting themselves.
In an ironic twist, the major price determinant has moved from OPEC (having only 40% of the world production) and the oil companies to the speculators in the commodities markets. What goes on in the essentially unregulated New York Mercantile Exchange (NYMEX)—without Commodity Futures Trading Commission (CFTC) enforced margin requirements, and, unlike your personal purchases, untaxed—is now the place that leads to your skyrocketing gasoline bills. OPEC and the Big Oil companies reap the benefits and say that it's not their doing, but that of the speculators. Gives new meaning to "passing the buck."
Deborah Fineman, president of Mitchell Supreme Fuel Co. in Orange, New Jersey, summed up the scene: "Energy markets have been dictated for too long by hedge funds and speculators, who artificially manipulate the numbers for their own benefit. The current market isn't based on the sound principles of supply and demand but it is being rigged by companies and speculators who are jacking up prices for their own greed."
Harry C. Johnson, former banker who worked for many years inside Big Oil and ran his own small oil company in Oklahoma, blames the CFTC, the Department of Energy, the Administration, and Congress, as "asleep at the switch on an issue that is probably costing U.S. consumers $1 billion per day."
He cites "some industry experts, who profit greatly from the high price of crude, and have stated openly that the worldwide economic price of crude, absent speculators, would be around $50 to $60 per barrel.
Imagine, our government is letting your price for gasoline and home heating oil be determined by a gambling casino on Wall Street called NYMEX. The people need regulatory protection from speculators and an excess profits tax on Big Oil.
In addition, a sane government would see the present price crises as an opportunity to expand our passenger and freight railroad capacity and technology.
A sane government would drop all subsidies and tax loopholes for Big Oil's huge profits and other fossil fuels and promote a national mission to solarize our economy to achieve major savings from energy conservation technology, retrofitting buildings, and upgrading efficiency standards for motor vehicles, home appliances, industrial engines and electric generating plants.
Those are the permanent ways to achieve energy independence, reduce our trade deficit, create good jobs that can't be exported and protect the environmental health of people and nature.