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Who is Responsible for the Rising Gas Prices?

1:29 PM, Mar 20, 2012   |    comments
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(KNSD)  You are listening to the sounds of your hard earned money pumping strength into economies all over the world.

Drivers know that amber liquid is gold to economies worldwide, which has lawmakers like Senator Barbara Boxer concerned Wall Street is fueling the gas price hike, too.

Boxer is one of dozens of lawmakers questioning whether Wall Street banks are pushing the price you pay at the pump higher, so they can profit on bets that they make on future prices of gas.

The speculation is gaining merit from this updated report from the St. Louis Federal Reserve.

It says two main factors drive gas prices up.

First; "Global demand shocks" like tensions in the Middle East and second the feds believe "Speculation" played a significant role in the oil price increase between 2004 and 2008 and its subsequent collapse.

"The CFTC commissioner Bart Chilton has calculated that consumer's pay an extra 7 to 15 dollars more on each tank of gas due to oil speculation," said Boxer.

Senator Boxer joined forces with 67 other members of Congress and sent a letter to the commodities future trading commission.

The letter accuses the CFTC of "dragging its feet on imposing strict speculation limits to eliminate, prevent or diminish excessive oil speculation."

Boxer believed immediate action could lead to cheaper prices at the pump.

Gas expert and economist James Hamilton says lawmakers are off target.

"It's nice to tell a simple story, one that resonates with some voters. If you can say there's one bad guy that caused this whole problem, a lot of politicians like to get on board with that," said gas expert and economist James Hamilton.

Hamilton says limiting the amount of oil that any individual corporation can control in a given day isn't the answer.

"I think it has nothing to do with Wall Street and everything to do with refiners in Europe trying to get an adequate supply of oil," said Hamilton.

Economists and lawmakers can agree that we are using less gas in the U.S. but China is making up the difference.

And with several countries relying on our oil profits, there may always be a hefty price at the pump.

KNSD

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