With the average price per gallon of gas in Ohio topping off at $3.85, small business owners and families are eager for economic relief. Daniel Jarvis, who owns his own independent trucking company in Ohio, recently joined me at a gas station in Northeast Ohio because he's siphoning off more and more money to afford record-high prices at the gas station.
Ohioans like Daniel deserve relief from high gas prices.
While there's no single silver bullet, one way to help lower them is to address speculation. As Ohio families struggle to afford gas, Big Oil companies and Wall Street investors are getting rich. Every time there's an outage in a pipeline, or a fire at a refinery, or turmoil in the Middle East, oil companies and Wall Street speculators use it as an excuse to spike the price of oil.
Speculation occurs when prices are driven by investor activity, rather than traditional market forces. And it's costing Ohioans a lot of extra money at the pump.
A recent report in Forbes magazine showed that reckless Wall Street betting adds a $0.56 premium to every gallon of gas. If you are driving a sedan, then that is nearly $10 extra you're paying each time you fill up your gas tank. If you are driving a truck, it's close to $15. Over the course of weeks, months, and years, Ohioans are losing hard earned money at the gas pump because some Wall Street banker gambles to make millions at the expense of average Americans.
How does Wall Street oil speculation affect prices for businesses and citizens who buy and sell gas?
Basically, multi-millionaire and billionaire investors - hedge funds and foreign financial companies with no legitimate business interests that are affected by gas prices - place bets on the price of oil on "futures exchanges" and unregulated "swaps" markets. When they bet on what oil prices will be three months from now, retailers are forced to pay more for the oil they buy now, which means higher prices at the pump.
For truckers like Daniel - Americans who ensure we can buy basic necessities in grocery stores and gas stations - high gas prices jeopardize their ability to continue operating. As another Ohio trucker recently told me, "when oil prices go up, the price of tires go up, it costs more for an oil change, and then, I have to pay for fuel surcharges.
One estimate put the total cost of speculation to the trucking industry at $29.1 billion. For most small business owners, high gas prices don't mean high profits.
And higher fuel costs get passed along the production line, ultimately making food at restaurants and super markets more expensive at a time when working families are struggling to make ends meet.
That's why, last week, I asked U.S. Attorney General Eric Holder about the work of a Justice Department taskforce charged with fighting oil speculation.
And it's why we must fully enforce the bipartisan 2010 Wall Street reform law. This law empowers federal watchdogs to enforce stronger consumer protections that not only help consumers, but also ensure a stronger economic recovery. I'm now asking this watchdog group, the Commodity Futures Trading Commission (CFTC), to enact and enforce those long-overdue consumer protections.
While we've seen 24 consecutive months of private sector job creation, our fragile economic recovery could be undermined by high gas prices. We cannot afford to sit idly by while Wall Street and Big Oil get richer and Ohio's families and small business owners foot the bill.