Anyone catch 60 Minutes on Sunday? If not, you missed a great and important story.
I've been one to argue that the price of gas was mostly fixated on supply and demand. However, this news piece showed otherwise, and has no doubt doubt changed my opinion on the matter.
Again it seems, Wall Street has bit us on the ass big time.
Why has the been allowed to happen? According to this report, regulations in the futures market are practically non-existant. Apparently, the deregulations efforts were originally enacted for the benefit of--get this--ENRON.
Check this out:
Wall Street bankers insisted at hearings last summer that the rising oil prices were a result of supply and demand, not excessive speculation. But prices continued to go up, even jumping by a record $25 on a single day when there were no supply disruptions to justify the increase and demand was actually going down.
This deregulation of the futures market was originally enacted for the benefit of Enron and made it possible for that firm to manipulate the California electricity market, driving prices up by as much as 300%. It has since been exploited far more widely, and the incoming Obama administration has promised to address the regulatory loophole.
Please take the time to read the story and/or watch the video.
Did Speculation Fuel Oil Price Swings?, 60 Minutes: Speculation Affected Oil Price Swings More Than Supply And Demand - CBS News