DES MOINES, Iowa — Gasoline costs $1 per gallon more than it did last Memorial Day, and the Wall Street speculator, more than Texas oilmen and OPEC ministers, is often seen as the bad guy at the gas pump.
There won’t be another drop in the price of gasoline this weekend, and it’s due to Goldman Sachs and Morgan Stanley,” said Mark Meyer, president of Keck Energy. On Tuesday, Goldman Sachs and Morgan Stanley, both major investors in crude oil markets, issued forecasts of higher crude oil prices this summer — even as prices at the pump in some areas began to descend.
The price of oil promptly rose more than $1 a barrel in the next two trading days on exchanges.
“What a crazy system we have,” he said. “People resist paying an extra 5 cents per gallon in gas tax to fix the highways, but we allow speculators to raise the price of gasoline by 50 cents a gallon.”
As crude oil and gasoline prices have risen 25% since Jan. 1, more charges of market manipulation are flying.
U.S. regulators have launched one of the biggest-ever crackdowns on oil price manipulation, accusing traders and companies of artificially driving up crude oil prices in 2008.
Also this month, Rex Tillerson, chairman of ExxonMobil, told a congressional committee that supplies of crude oil and refined gasoline were adequate and that the supply-and-demand price of crude probably should be around $70 a barrel.
Last week, U.S. attorneys filed lawsuits against two oil traders in Australia and California and three American and international firms, alleging that in early 2008 they tried to hoard nearly two-thirds of the available supply of a crucial American market for crude oil, then abruptly dumped it and improperly pocketed $50 million.
That activity coincided with the rise in crude oil prices that year to $147 per barrel, still a record.
Retail gasoline prices soared above $4 a gallon that summer, cutting demand by an unprecedented 5% during peak driving season in June and July and teaching the oil industry that $4 gasoline may be the point of price resistance.
That lesson was relearned last month when prices climbed to more than $4 nationally. The American Petroleum Institute reported that demand for gasoline dropped 2.2% during April from the same month a year earlier.
So the sudden drop in oil prices in early May, spurred by speculative selling, gave conspiracy theorists more ammunition. Market manipulators pulled the price back just at the point where demand is hurt, the speculator detractors said.
Schork said he isn’t sure that a market conspiracy could work that deeply.
“Speculation tends to exaggerate prices,” he said. “There’s no question that demand for gasoline seems to soften between $3.50 and $4 per gallon.”