The new oil cheats.

• Author: Hightower, Jim
• Position: Vox Populist - Role of the commodity-based derivatives in influencing the price of oil - Viewpoint essay

A covey of tongue-clucking industry analysts assures us that nothing can be done about rising oil prices. It's simply the law of supply and demand in action, they say, so suck it up, and pay up.

But hold your BPExxonMobil-ShellChevron horses right there. Supply and demand? The supply of crude oil has risen this year to its highest level in nearly two decades, even while the demand for gasoline has dropped dramatically, having fallen to a ten-year low. Let's see--supply up, demand down. That's a classic market formula for cheaper prices at the pump. Yet our prices rose for most of the first half of the year.

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What's going on here is not the "magic of the marketplace," but some hocus-pocus by brandname dealers. What might surprise you, though, is that the wheeler-dealers who jacked up our pump prices don't operate under the BPExxonMobil-ShellChevron brands--but the logos of Goldman Sachs, Morgan Stanley, and other Wall Street traders that have been placing vast, unregulated, secretive bets on the future price of oil. They're playing an electronic casino game in a global "dark market" of exotic derivatives and credit swaps.

If this sounds vaguely familiar to you, it's because this is the same game that Wall Street played with subprime mortgages, leading to the present crash of our economy. And, yes, these are the exact same banksters that you and I are bailing out with our trillions of tax dollars.

Yet, there they go again. By pooling money from sheltered hedge funds, sovereign state funds, offshore accounts, and other superwealthy investors, speculators like Goldman and Morgan have quietly been buying trillions of dollars worth of oil derivatives--which essentially are bets that oil prices will rise to a certain level by a certain date. Unlike those investors who actually purchase contracts for future delivery of oil, there is no limit on how much money these gamblers can put into the oil market. Nor do they have to...