CAN OIL SPECULATION BE STOPPED? Beyond the jobs crisis, the biggest threat to economic recovery is arguably the price of oil. A rise in oil and commodities prices will almost certainly constrain demand at exactly the moment it is most needed. Recently, oil traded at $104.42 a barrel, up 7 percent in one week.
As we know, oil prices can skyrocket with little warning. In the summer of 2008, oil hit $147 a barrel and gasoline went above $4 a gallon; airfares shot through the roof, and food prices climbed as well. Remember also that for about six weeks during the 2008 presidential campaign, all anyone talked about was the price of gas. John McCain and Hillary Clinton went so far as to advocate for a temporary repeal of the gas tax. And lest we forget, it was in this panic that the catchphrase “drill, baby, drill” was born.
So in addition to being concerned about the impact of rising oil prices on the recovery, the White House should also be worried that when the price of gas spikes, the country’s politics go haywire. As FiveThirtyEight’s Nate Silver recently showed, high gas prices are correlated with poor incumbent-party performance in presidential elections.
You might think there’s not a whole lot the president can do about the price of oil. After all, global and seasonal increases in demand, combined with instability in the Middle East, seem to be pushing the price of oil up—and all are outside the White House’s control.
But that’s not the whole story. After the 2008 price explosion, observers from George Soros to former Commodity Futures Trading Commission (CFTC) staffer Michael Greenberger concluded that supply-and-demand fundamentals couldn’t account for the sharp rise in prices. In the first six months of 2008, US economic output was declining while global supply was increasing. And even if supply and demand were, over the long run, pushing the price of oil up, that alone couldn’t explain the massive market volatility. Oil cost $65 per barrel in June 2007, $147 a year later, down to $30 in December 2008 and back up to $72 in June 2009.
The culprits, they concluded, were Wall Street speculators. Commodities markets essentially involve two kinds of participants: “end users” like farmers and airlines that use commodities markets as a form of insurance against price fluctuations, and speculators like hedge funds, investors and big banks that bet on those same fluctuations. In the past decade, the role of end users in the crude oil futures market has shrunk, while the role of speculators has ballooned.
Wall Street banks say there’s nothing to see here, but it’s almost impossible to make sense of 2008’s massive commodity price spike without concluding that the speculators played an outsize role. The question now is, Is it happening all over again? “The most conservative thing that can be said right now [is that] this would be no time to dismiss the role that speculation plays,” says Greenberger. “A moderate statement is that speculation is creating volatility that is aggravating the uncertainty in the market.” A host of businesses and organizations from Virgin’s Richard Branson to Oxfam all make the same case.
One way to attempt to constrain these volatile mini-bubbles is for the CFTC to impose “position limits,” essentially caps on the size of the bets that speculators can make. Not surprisingly, the big Wall Street banks don’t want this, and the two Republican members of the commission don’t favor any position limits rules with real teeth. To his great credit, CFTC chair Gary Gensler has taken a strong position in advocating strong limits, and Democratic commissioner Bart Chilton has been supportive as well. That leaves the deciding vote in the hands of Democratic commissioner Michael Dunn, who has expressed misgivings.
It so happens that Dunn’s term is up in June, and on March 7 MSNBC’s The Ed Show reported that the White House has begun vetting his replacement. Given the precariousness of the recovery and the political explosiveness of gas prices, nominating a replacement enthusiastic about reining in speculation may be the single most important decision the White House makes between now and election day. CHRISTOPHER HAYES
75¢ TO THE $: March 8 marked the 100th anniversary of International Women’s Day. Now celebrated in more than 100 countries, the event was launched by German activist and politician Clara Zetkin, who proposed the day not only to celebrate women but also to assert women’s right to vote, work and hold public office. As women around the world continue to face discrimination and violations to their human rights, International Women’s Day serves as a reminder that, in the words of President Obama, “while enormous progress has been made, there is still work to be done before women achieve true parity.”
In order to statistically illustrate this progress and continued disparity, the White House Council on Women and Girls recently released a report titled “Women in America: Indicators of Social and Economic Well-Being.” It is the first comprehensive federal report on the status of women in America since 1963.
Many of the statistics are not altogether surprising: fewer women are getting married, and of those who do marry, an increasing number are doing so later in life. Women are also having fewer children and waiting longer to start their families.
The report highlights substantial gains in education over the past forty years and shows how women have caught up with men in college attendance. In fact, for all races and ethnicities, they received a higher percentage of bachelor’s and master’s degrees than men.
Despite this, the labor force participation rate for women is lower than for men. And while earnings for women (and men) increase with the level of educational attainment, the report states, “the male-female pay gap persists at all levels of education for full-time workers.” Women earn roughly 75 percent as much as men for all levels of education. As a result, they continue to be more likely than men to live in poverty. Poverty rates for single-mother households are particularly high, and black and Hispanic women are more likely to be poor than white women.
While there is clearly much work to be done, having a clear statistical picture of where American women stand is a start. KATE MURPHY