Why are gas prices high?

Kids, I remember the '70s. I recall waiting in my car all night long -- in a weird line of similarly stranded travelers, snaking through a residential neighborhood -- for a chance to pump up my Ford Falcon when the gas station opened at dawn. When I finally got home from school the next morning, it was time to go back to school.

The Carter-era gas crisis hit like the Joplin tornado: Precious little warning. Just...WHAM.

Did a similar crisis happen in 2008? Did it happen in 2011?

No. That fact tells you that something other than a supply squeeze caused gas prices to reach the four-buck-a-gallon stage. I am here today to tell you what that "something" is.

From Dakinikat:

There’s another interesting WikiLeak that’s come to light about high gas prices. It seems that President Bush asked the Saudis to pump extra oil to help relieve market pressure on prices in 2007 and 2008. The Saudis suggested that Bush tackle the problem by reigning in Wall Street speculation.

Emphasis added, and please study those words. Most Americans do not know -- most Americans would refuse to believe you if you told them -- that Wall Street speculation in commodities drove up oil prices. It's also driving up prices in food.

Not inflation, not supply shortages: Speculation. These are the same financial games that ruined the housing market.

Stop mumbling nonsense about the free market: I've read The Wealth of Nations and you haven't. (Probably.) I can assure you that Adam Smith never had this crap in mind; in fact, he would be appalled.

From the original McClatchy story:

"Saudi Arabia can't just put crude out on the market," the cable quotes Naimi as saying. Instead, Naimi suggested, "speculators bore significant responsibility for the sharp increase in oil prices in the last few years," according to the cable.

What role Wall Street investors play in the high cost of oil is a hotly debated topic in Washington. Despite weak demand, the price of a barrel of crude oil surged more than 25 percent in the past year, reaching a peak of $113 May 2 before falling back to a range of $95 to $100 a barrel.

When they say "hotly debated" they mean "The facts are clear, but admitting them out loud would be embarrassing."

Matt Taibbi:

The cables show that at the height of the bubble, in May 2008, U.S. officials met in Riyadh with the Saudi assistant petroleum minister, Prince Abdulazziz bin Salman bin Abdulaziz al Saud, who told the U.S. he was "extremely worried" that high prices would destroy the demand for crude.

And here's the reason why gas prices hit the four-buck-a-gallon mark right now:

Because of various changes to the way commodities were traded -- including a series of semi-secret exemptions handed out to commodities speculators, allowing companies like Goldman Sachs to popularize commodities speculation -- there was, by the summer of 2008, a cascade of investor money pouring into commodities, mostly all betting on a rise of commodity prices. Much of this might have been due to money flowing out of mortgages and into the "safe" haven of commodities, with exploding energy prices being an unwelcome side effect. While there was less than $20 billion of speculative activity in commodities in the early 2000s, by 2008 that number had jumped up to well over $200 billion, with virtually all that money being "long" money, i.e. bets on a rise in prices. All of that new money turned into a battering ram pushing prices through the roof. We are seeing the same phenomenon this year.

The Randroids, the baggers, the Peter Schiff and the Gerard Celente types all want you to blame inflation, not speculation. There is no inflation crisis. If there were, your wages would be going up, and so would the value of your home. The interest rate would skyrocket.

As always, the libertarians are providing ideological cover for the bandits who are ruining this nation.