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Chuck Schumer Is Responsible For The Price Of Gas

April 20th, 2011 in News by

Bubble, Bubble, Oil and Trouble

We assemble around the pumps staring at gas prices like hominids around the monolith, shrieking and beating our chests. But whereas Stanley Kubrick’s primates in 2001 were willing to touch the slab and receive the divine, other-worldly intelligence it offered, we simply tighten the cap and blithely go about our day, all the while filling the wallets of oil companies and banks that conspire to pick every last nickel, dime and piece of lint from our pockets.

The ongoing drama in the Beltway, quibbling over mere billions of a multi-trillion dollar problem, is the ultimate subterfuge blinding us from the true budgetary crisis in our nation and the world. The $39 billion compromise achieved on Capitol Hill last week is a billion shy of ExxonMobil’s profit for 2008, the last time oil prices crippled the nation and filled the corporation’s coffers. This was the largest profit ever posted by an American public company. Once again analysts are predicting record profits when the publicly traded oil companies release their first quarter earnings in the coming weeks.

I’m officially calling bullshit; calling it on the whole stinking lot of them. While oil companies reap historic profits and politicians try to out-Ayn Rand one another, espousing free market ideals they completely misinterpret, Wall Street and Big Oil are about to deliver the coup de grace on the American people and the world at large.

The Intercontinental Exchange (ICE), in partnership with NASDAQ, recently upped the ante to purchase the historic New York Stock Exchange (NYSE Eurodex). Naturally, your next questions should be: “What does this have to do with the price of gasoline at the pumps?”  “Why is this important?” “Why should I care?” and “What can I do about it?”

Glad you asked.

What does this have to do with the price of gasoline at the pumps? Everything. Here’s the short version of exactly why gas is so high right now. All you have to do is memorize the following paragraph to be able to shut anyone up at a party who claims that Middle East uprisings are responsible for driving up oil prices.

Nearly 20 years ago Wendy Gramm and her senator husband Phil Gramm created the Enron loophole when Mrs. Gramm chaired the Commodities Futures Trading Commission (CFTC) under President George H.W. Bush that cleared the way for trading energy futures on the commodities exchanges. On December 21, 2000, President Bill Clinton signed it into law. In 2001, the two largest investment banks in the nation, Goldman Sachs and Morgan Stanley, teamed up with British Petroleum (BP) to start their own exchange called the Intercontinental Exchange (ICE) to handle commodities transactions. In January of 2006, George W. Bush made it possible for anyone investing in commodities to hide their identity, turning the ICE into a powerhouse exchange overnight. When the Glass Steagall Act was repealed, deregulating the banking industry, banks and investment banks merged; further, because of the commodities deregulation under Clinton, then Bush, banks are now able to set the price of commodities by having their analysts forecast pricing and purchase large quantities of commodities through the banking end on exchanges they own and control.

There you have it. I mention all of the presidents involved in this fiasco to illustrate that this is not a partisan issue. Both parties have blood on their hands. They have created a trading exchange that, despite being only 10 years old, is so big and powerful it can partner on an $11 billion bid to acquire the New York Stock Exchange.

Why is this important? The obvious, most immediate reason is the pain at the pump that you’re experiencing personally and the pain that threatens the global economic recovery. But there’s a larger problem. The International Monetary Fund and the World Bank have been vociferously warning anyone who will listen that there is a direct correlation between sharply rising crude oil prices and starvation.

There are three reasons for this: 1) The surge in oil prices has increased demand for bio-fuel substitutes, so instead of feeding people we feed our vehicles. 2) Higher oil prices means higher production costs. At the farm level the hard production costs of fertilizer and irrigation rise in lockstep with crude oil prices. 3) Lastly, the cost of transporting goods from farm to table increases directly and dramatically.

So, the answer to the first question is: This is important because high oil prices kill people.

Why should I care? Another wonderful question. Well, apart from the obvious fact that we are all part of the human race and should care about things like forced hunger and starvation, there is a distinctly American reason to care about this issue: Fairness.

Politicians, lobbyists, policy makers, and pundits are all mixing metaphors and messing with the essential American principles of fairness. Tea Partiers, conservative radio hosts, radical free-market freshmen Republicans in Congress and kooky presidential candidates are carrying weathered copies of Atlas Shrugged and the Bible, and screaming from the mountaintops, “Set my market free!” (The Bible-toting Objectivist is my new favorite American oxymoron.)

Talking about “free-markets” is fun, but there are seriously flawed fundamentals at work here. As we have learned from every bubble burst in the era of deregulation, the markets do not self-police nor are they inherently moral. Markets, like people, must be guided by regulations and boundaries; investors must have the freedom to maneuver within these parameters, and suffer punishments for exceeding them. Free market radicals should understand better than anyone that a market without regulations is like the Bible without Commandments.

A market where only a handful of powerful people determine the price of commodities, buy and sell them at will, and reap huge rewards while starving millions of people worldwide and decimating the savings of Americans almost overnight is anything but moral. It’s exactly immoral and completely un-American.

 What can I do about it? Plenty.But we have to work together. It starts with understanding the fundamentals behind oil pricing and then figuring out who’s lying. First and foremost, Goldman Sachs and Morgan Stanley are both lying unabashedly through their teeth by blaming political unrest and upheaval for potentially hindering supply and causing speculative panic in the market. They’re ignoring that the United States and OPEC oil reserves are at an all-time high, that actual demand is still sluggish, and that we continue to build more energy-efficient vehicles and access natural gas and renewable resources. 

Now they’re playing a game of chicken and managing our expectations, sending mixed signals about “demand destruction” and how high energy prices might have a deleterious effect on the global economic recovery even though their own analysts set the price of oil futures contracts and their own bankers buy them up. What they’re doing is establishing a new low, an artificial floor. It’s genius. Get us used to the idea of $5 per gallon pricing so that $4 doesn’t seem so bad. This is a test and we’re eating up their lies.

There are four primary solutions to the global oil problem. They’re a heavy lift and you should know what they are, but don’t be overly concerned with these details; your part comes later. Briefly, the solutions are as follows: (1) Reinstate Glass-Steagall, (2) Incentivize oil companies to invest in renewable energy by levying enormous fees on non-compliant companies, (3) Strip the ICE of its foreign-based exchange status to restore transparency to the commodities and derivative market and (4) Kill all speculative conflicts of interest by crafting legislation that prohibits investment banks from owning a controlling interest in any oil-related corporation.

202-224-6542. Give him a jingle.

Sounds like a crazy, impossible pipe dream. Not to worry. Thankfully there is one man with the power to get all of this done. Who is that powerful you ask? New York’s own Sen. Charles Schumer.

Schumer sits on the Rules, Economic, Judiciary, Finance and Banking committees. When it comes to anything related to finance, Charles Schumer is the single most important man in America. Now for your part: Because his office doesn’t accept emails, please call his office at 202-224-6542 and tell whoever answers the phone that you would like Sen. Schumer to please lower the price of gas at the pump. Don’t take no for an answer.

Then we go viral. It’s on. Tweet and post a link to this article with the message: “Only Chuck Schumer can lower the price of gas. If he doesn’t, I guess he’s responsible.”

Good luck and Godspeed. Remember, there are tens of millions of starving people counting on you to tweet our demands.


Charles knows enough to cancel the subsidies (starting around 1:30).

Click on the following links to read other oil-related entries

LIBYA. MORE BLOOD FOR OIL. “Crude Behavior” March 23, 2011 - JedMorey.com

BEHIND THE BUSINESS OF EXCHANGES. $4 Per Gallon: Beating the Oil Drum. March 9, 2011 - JedMorey.com

HAPPY NEW YEAR AMERICA. OIL’S HEADING TO $4. “Why Is Oil So High?” Crude: Part II – Long Island Press

OP-ED: INITIAL REACTION TO BP OIL SPILL. “Our Addiction To Oil” June 24, 2010. – JedMorey.com

CRUDE: HOW WALL STREET SCREWED AMERICA IN THE SUMMER OF 2008 – Long Island Press

Author: Jed Morey

Jed Morey is the publisher of the Long Island Press, LI's Cultural Arts and Investigative News Journal. The Press has a monthly circulation of 100,000, and www.longislandpress.com, welcomes more than 500,000 unique visitors every month. He serves on the board of the Holocaust Memorial and Tolerance Center in Nassau County, as well as the President's Council of Big Brothers and Big Sisters of Long Island. In addition to the contributions on this blog, Morey authors a column for the Long Island Press titled "Off The Reservation" and is a staunch advocate for Indian rights. The column was voted Best Column in New York by the NY Press Association in 2010 and third overall in the nation among alternative publications by the Association of Alternative Weeklies in 2012. Morey lives in Glen Cove with his wife, Eden White, and their two daughters.

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15 Comments

Mark Vosburgh

April 20th, 2011

Thank you again Jed, for another thoughtful, insightful look into what’s hidden behind the scenes of the ‘Great American Scandel”.

James M. Gross

April 21st, 2011

Hi Jed,

Insightful article. We must break oil. Now.

I agree using sources of food for fuel equals a death sentence for many. Perhaps, Solazyme has an answer. After all, algae is not on most people’s menu (Cream of Algae soup?). http://www.solazyme.com Further, the Chinese are spending millions of dollars to design and PATENT new strains of high oil producing algae.

Does a phone call to a politician work? Without a paper trail will there be action taken?

Enjoy the Holiday!

D Berns

April 21st, 2011

I tried calling that number and it just rang and rang…eventually cutting to a busy signal.

Vivian Leber

April 21st, 2011

Though an excellent, penetrating analysis, I think the headline is unfortunate. The superficial reader of all the inevitable tweets of your post, who won’t read beyond the headline, will only see a gas-gouging scheme by Schumer and the Democrats. Moreover, Schumer’s presumed power is easily blocked by Republican filibuster, the House, and the noise of real and manufactured crises playing out in politics and the media.

Jed Morey

April 22nd, 2011

You make an excellent point and I appreciate the feedback. The headline was born of my frustration in writing continuously about this topic with zero traction. I find that the subject and the complexity of it overwhelm people; they look for someone to blame and are being told my the media and elected official the exact opposite of what is really going on. By offering Schumer up as somewhat of an anti-hero I wanted to give people someone to focus on who actually does have more influence in this arena than anyone else… It’s also a back-handed compliment of sorts because Schumer was intimately involved in nearly every major level of deregulation involved in this scandal and receives more donations from the players in this story than any other elected official. If not for Schumer, this situation wouldn’t be nearly as advanced as it is. So while I understand and agree with your assessment, I believe it’s time to turn up the heat on these people one by one to help the public truly grasp what’s at stake, who is to blame and ultimately who needs to fix this mess they have created.

Trelayne

April 22nd, 2011

OK, but you missed a couple of points.

1) In 2008, the oil companies made over 100 billion in profits, but ACTUALLY spent only 54.5 mil on developing alternative energy sources. Morgan Stanley and Goldman Sachs spent none.

2) You do recall that taxpayers SPENT billions in 2009-2010 bailing out Goldman Sachs and Morgan Stanley so they could turn around and stick it to us in 2010-2011.

3) Are you aware that Goldman Sachs has been buying up electric power plants? Could it be that these two scuz-bag companies plan to leave us freezing in the dark next winter?

4) DOE’s Stevie Chu and Dr. Der sold a million gallons of home heating oil from the NE Home heating oil reserve, in February, yet, to Morgan Stanley, for $2.12 per gallon, while the rest of us were maying $3.70. In fact, by feb.11, 2011, there were 0 gallons left in that reserve because those naughty boys had sold it all, oh yes, Shell and Hess bought most of the remainder at that bargain price.

5) The oil companies, during GW Bush’s term in office, made over 600 Billion in profits. Obama’s 2008 campaign promise was to end subsidies to them and place a surcharge on their profits. Its 2011, gang, and pump pain is back, bigger than ever, we are still paying subsidies of 4 billion/yr to oil companies, and only today, was Eric Holder asked to “look into” price gouging. Wow, what happened there????

Is everyone in DC asleep at the switch, or are pockets being lined at our expense, again (still)?

Edward Burns

April 23rd, 2011

Let me get this straight: Americans are paying $1.2 per litre of petrol—one of the cheapest petrol prices in the developed World, use 25% of the World’s petrol… and are whining about high prices. Tell me that this is not the behaviour of an addict.

http://www.wolframalpha.com/input/?i=%244.4+per+gallon+in+litres

And *then* use “the World’s starving” as a moral baton, and put all this on one guy (Only Chuck Schumer can lower the price of gas. If he doesn’t, I guess he’s responsible).

You guys are: hilarious, addicted, and require the narrative of “only one man, can put a stop this”.

This, from the country where the greatest president walked 6km to school. I wonder: when you hear that story, do you go: wow, inspiring story. Because the same child today would be labelled (pick one) hippy/envirofundamentalist/poor person and be driven to school using imported petrol.

[...] Big Oil are about to deliver the coup de grace on the American people and the world at large. Chuck Schumer Is Responsible For The Price Of Gas Jed Morey From the same article, some proposed solutions: [...]

[...] are welcome to review my assertions and follow my logic in arriving at this conclusion by clicking here. Then, you can read the Senator’s response below. Here is my take (spoiler alert) on his rebuttal: [...]

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