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How Wall Street Speculation is Driving Up Gasoline Prices Today

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  • Robert Pollin
  • James Heintz

Abstract

Pollin and Heintz examine the factors contributing to the recent run up in gas prices for consumers. They find that to a significant extent, this is the result of the economy moving out of a deep recession, into a recovery, which has increased the demand for gasoline. But a major additional factor is the rapid growth in large-scale speculative trading around oil prices through the oil commodities futures market. They estimate that, without the influence of large-scale speculative trading on oil in the commodities futures market, the average price of gasoline at the pump in May 2011 would have been $3.13 rather than $3.96. This means that the average U.S. consumer paid a 83-cent-per-gallon premium in May for their gasoline purchases due to the huge rise in the speculative futures market for oil. Fortunately, provisions of the Dodd-Frank Financial Reform Law grant the federal government the authority to impose meaningful control of this speculation on the commodities futures market. But the Commodity Futures Trading Commission needs to exercise this authority provided by Dodd-Frank in ways that protect ordinary people and small businesses from speculation.

Suggested Citation

  • Robert Pollin & James Heintz, 2011. "How Wall Street Speculation is Driving Up Gasoline Prices Today," Research Briefs peri_afr_research_brief_j, Political Economy Research Institute, University of Massachusetts at Amherst.
    • Handle: RePEc:uma:perirb:peri_afr_research_brief_june20
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    File URL: https://per.umass.edu/fileadmin/pdf/research_brief/PERI_AFR_Research_Brief_June20.pdf
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    Cited by:

    1. Robert Pollin & James Heintz & Heidi Garrett-Peltier & Jeannette Wicks-Lim, 2011. "19 Million Jobs For U.S. Workers: The Impact Of Channeling $1.4 Trillion In Excess Liquid Asset Holdings Into Productive Investments," Published Studies peri_19million, Political Economy Research Institute, University of Massachusetts at Amherst.
    2. Jungmann, Benjamin, 2021. "Growth drivers in emerging capitalist economies before and after the Global Financial Crisis," IPE Working Papers 172/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Erten, Bilge & Ocampo, José Antonio, 2013. "Super Cycles of Commodity Prices Since the Mid-Nineteenth Century," World Development, Elsevier, vol. 44(C), pages 14-30.
    4. Robert Pollin, 2012. "The Great U.S. Liquidity Trap of 2009-11: Are We Stuck Pushing on Strings?," Working Papers wp284, Political Economy Research Institute, University of Massachusetts at Amherst.
    5. Benjamin Jungmann, 2023. "Growth drivers in emerging capitalist economies: building blocks for a post-Keynesian analysis and an empirical exploration of the years before and after the Global Financial Crisis," Review of Evolutionary Political Economy, Springer, vol. 4(2), pages 349-386, July.
    6. Robert Pollin, 2012. "The great US liquidity trap of 2009–2011: are we stuck pushing on strings?," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(0), pages 55-76.
    7. Robert Pollin, 2013. "Austerity Economics and the Struggle for the Soul of U.S. Capitalism," Working Papers wp321, Political Economy Research Institute, University of Massachusetts at Amherst.

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