Levin Sheds Light on Link Between Gas Prices, Speculators

If you're like me, you get a lot of emails from politicians, some asking for money, others keeping you up to date on their activities. Some you open, glance through, and forget about. A few make an impact.

Sen. Carl Levin most recent email -- on gas prices -- fell into that last category. Republicans have been trying to make hay against President Obama as gas prices have risen in recent months. Estimates are that as much as 56 cents of the cost of each gallon of gas is due to speculators. And 80 percent of the trades made on a barrel of oil are made by speculators, according to testimony to the Senate Permanent Subcommittee on Investigations, chaired by Levin.

The excessive speculation distorts the relationship between supply and demand. As Levin explained, speculation keeps prices from falling when demand is low because speculators are betting that the price will eventually go back up, even if demand is low right now.

"Nowadays, that relationship is largely absent. There is no shortage in the supply of oil globally, and the United States is producing more oil than it has in a decade. Last year, the United States actually exported more gasoline and other petroleum products than we imported. At the same time, U.S. demand for fuel actually sank," Levin's email said.

"Under normal economic conditions, rising production and lower demand should mean lower prices. Instead, prices are more volatile than ever. One key reason is that speculators are playing too large a role in the oil market. If we are to get a handle on oil prices, we have to curb excessive speculation."

So why doesn't Congress do something? Turns out it already has. The Dodd-Frank Act passed in July 2010 told the Commodities Futures Trading Commission to establish trading limits to prevent speculators from dominating markets and distorting prices. The CFTC wrote the rules, but they are not yet in force because the financial industry has filed a lawsuit to stop the new rules and throw them out permanently.

Levin last week worked with a group of 18 other U.S. senators to file a brief with the court in support of the rules imposing limits on speculators. The brief stresses that the Dodd-Frank Act required limits on speculators, limits that were first put in place in 1936.

Lots of money is at stake, and the financial industry will be well-funded in this court fight. Levin is right to highlight that speculators are driving up the cost of oil.

Let's Not Forget Michigan's Tar Sands Disaster

Nearly two years ago, an oil pipeline burst and spilled thousands of gallons of oil into the Kalamazoo River. Two years is an eon in the days of the 24-hour news cycle so most of the media in Michigan has forgotten about it.

Leave it to Rachel Maddow to not only remember the mess, but to tie it to one of the national issues of the day -- construction of the Keystone Pipeline, which Republicans are trying to pressure President Obama into approving.

On her MSNBC show Friday (March 9, 2012), Maddow noted that the national already has tar sands pipelines like Keystone and they have created messes of the kind that opponents of Keystone warn about. Her case in point was the spill in the Kalamazoo River. At the time of the spill, officials said the mess would be cleaned up in a mere month. But here we are nearly two years later, and work is still on going. Turns out, oil from tar sands is heavy and rather than floating on the top of the water so that it can be skimmed off, it sinks to the bottom of the river bed.

But let's let Rachel explain, as only she can. (The most relevant part of the clip starts about six minutes in.)

Visit msnbc.com for breaking news, world news, and news about the economy

McCain's Campaign Making Fun of Gas Conservation Measures -- Even As GOP Candidate Rogers Promotes Them

Sometimes a campaign can be a little too cute.

John McCain's presidential campaign decided to ridicule Barack Obama as he prepared to deliver a major address on energy and the economy Monday (August 4, 2008) by handing out tire gauges to the media. They were trying to claim that Obama had no plan for energy besides conservation (and what's wrong with conservation?), based on a remark he made about making sure your vehicle's tires are properly inflated.

Supposedly, Michigan Republicans also were handing out tire gauges to the hundreds of people lined up outside the Lansing Center for Obama's speech, although I stood in line close to a half hour and never saw anyone doing any such thing. (I did see one protester. She had to ask someone to take a picture of her with her anti-Obama sign because no one else had even come with her.)

So if handing out tire gauges is such a cute idea, maybe we Democrats in Livingston County should try it.

After all, Bill Rogers, candidate for the Republican nomination for the 66th House seat, has been handing out business cards promoting his candidacy.

On the back, Rogers listed 13 ways to save gas.

At the top of the list?

"Check air pressure in tires."

That Rogers, I knew he was a tree-hugging liberal at heart.