On the eve of Earth Day 2011, a year after the BP Gulf Oil Spill, it's somehow gratifying to see the President go after those who are profiting, at our expense, from high oil and gas prices. I hear the pain -- and the solutions -- from readers. (Read or add your own comment at How Do High Gas Prices Affect You and What Should Be Done).
President Obama has (finally!) asked the Justice Department to go after commodities traders who are speculating, and raising the price, of oil and gas. The research shows that these traders - not supply and demand, not OPEC -- are the reason for spikes in gas prices.
Second, Obama has also suggested eliminating from the FY 2012 budget the $4 billion in subsidies (your tax dollars) that go to oil companies. Aren't they making enough money?
Third, the Justice Department negotiated a deal requiring BP to pay $1 billion for the first step in restoring the marshes, beaches and ocean area damaged in last year's oil spill. The Clean Water Act provides a fine of $32,500 for every day the oil gushed.
Justice Department will also go after civil penalties resulting from BP's negligence in allowing the spill. This rings up at $4,300 a barrel.
Finally, the Justice Department is also considering filing manslaughter charges against BP managers for the deaths of oil rig workers. This is in addition to the $20 billion fund set up by BP for victims of the oil disaster.
Related Blog Posts
- Commodities Regulation Needed to Lower Gas Prices
- High Gas Prices Caused by Wall Street, not OPEC
- Could Oilzilla Be Good for Economy?
Economic Impact of Other Disasters
- Japan Disaster - $250 Billion
- Chernobyl - Unknown Billions
- Hurricane Katrina - $125 Billion
- Swine Flu Pandemic - Less than $11 Billion
- Exxon Valdez Disaster - $8.5 Billion
- Haiti Earthquake - $8.1 Billion
- Iceland Volcano - Less than $1 Billion
- Three Mile Island - $975 Million
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Oiled Bird Being Rehabilitated (Credit: Justin Sullivan / Getty Images)
Comments
You perhaps have forgotten what happened when the government tried to control the price of oil. THe spigots were turned off and we had long lines at the gas pumps. Encouraging more government intervention will only result in the consumer being more punished. What the governement needs to do is to clear the way for oil and gas exploration in North Dakota. I can assure you that the first day a drill but hits the ground OPEC will lower the price of crude and that is how the speculators can be dealt with.
OPEC can influence, but not control, the price of oil.Traders in oil futures bid on the price of oil based on what they think oil will trade at. They look at projected supply and demand, which OPEC can influence, to determine the price. However, traders can create a self-fulfilling prophecy by bidding up oil prices — even in the face of increased OPEC supply. Once this starts, other investors will bid on oil prices just like any other commodity, such as gold, creating an asset bubble.
In fact, this is exactly what happened in the summer of 2008. Gas prices rose to $4 a gallon as oil prices skyrocketed to $145 a barrel, even though demand and supply were fairly constant. In summer of 2009, gas prices again rose, despite the recession, which decreased demand.
Kimberly
why is America reluctant to drill their own oil? why depend on foreign oil? there must be a reason.
U.S. oil is getting more and more expensive to drill. The largest oil reserve in Alaska is slowly drying up. Deep-sea wells can cause catastrophic environmental damage, as seen with the BP Gulf Oil Spill and the Exxon-Valdez Disaster.