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Today the national average for regular unleaded gas is $3.98 a gallon. Just last month the price was $3.62. And last year at this time, it was just $2.90. The price of oil is at the highest level since 2008. So what’s causing the spike?
As lawmakers return to Congress from a two-week break, Republicans plan to roll out a series of laws aimed at making it easier to drill for new sources of domestic oil offshore. Democrats say the oil companies are swimming in profits and want to repeal billions of dollars in tax subsidies.
But Ed Wallace of Bloomberg Businessweek writes that speculators, looking to make a buck on commodities, and the Federal Reserve are to blame. Wallace says that speculators, like banks and investment houses, dumped hundreds of billions of dollars into oil futures, artificially inflating the price. And he says they have all that extra cash, because the Fed is loaning out money at historically low prices, and the most profitable thing to do is to buy up commodities like oil, silver and gold.