With gasoline in Marietta hovering at $3.95 a gallon on Friday, residents filling up may be questioning why prices are once again so high.
Some legislators say oil speculation is a key factor, that they hope to put a stop to.
A gallon of regular fuel was selling for $3.88 nationally Friday, according to auto club AAA. A recent report in Forbes detailed that excessive Wall Street betting was adding a 56-cent premium to every gallon of gasoline, prompting U.S. Sen. Sherrod Brown, D-Ohio, to call for a crackdown on oil speculation.
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KEVIN PIERSON The Marietta Times
Phil McWilliams, a truck driver for BFS Petroleum, works to dispense fuel into tanks at a truck depot off of Ohio 7 Thursday afternoon. U.S. Sen. Sherrod Brown, D-Ohio, is calling for a crackdown on oil speculation, which he and others say raises gas prices.
"That (56-cent premium) means for most people a fill-up is in the neighborhood of $15 more just to pay for the speculators," Brown said.
Oil speculation takes place when prices are driven by investor activity rather than by market forces like supply and demand.
"There certainly is a fear factor built in, plus a speculation factor built into the price of oil, that makes it worth more than it should be based on pure supply and demand," said Jeff Starner, owner of Merchants 5 Star, a local trucking company.
Fact Box
A look at fuel prices
National average for unleaded regular fuel was $3.88 on Friday.
National average for diesel fuel was $4.16 a gallon on Friday.
A year ago, the national average was $3.55 for a gallon of unleaded regular fuel and $3.94 a gallon for diesel.
The average price for regular gas in Ohio was $3.79 in a weekly survey.
Last year the Ohio average was $3.55 for a gallon of regular fuel.
Source: AAA auto club.
While there are many factors involved in the cost of gasoline, speculators are a popular target for ire.
"I think it's all speculation, people playing games," said John Shoemaker, of Cleveland, who stopped to fill his car with gas at Speedway on Seventh Street in Marietta on Thursday.
Brown said he thinks every time there is a refinery fire or pipeline outage, or a threat of crisis in the Middle East, speculators drive the price of gasoline higher.
He noted there is increased production of oil in the United States and lower demand, which should lead to lower prices.
"The laws of supply and demand would suggest that, but because of the speculators and the oil profiteers oil prices continue to go up," Brown said.
The Energy Information Administration says the supply of oil and gasoline is higher today than three years ago, when the national average for gas was $1.90 for regular unleaded. Demand for oil in the U.S. is at its lowest point since April 1997, the EIA says.
Oil prices were actually down early Thursday morning, as the price for oil hit $105.03, Starner noted.
"I think speculation is what we should deal with most aggressively. Oil companies are making more money. They're making huge profits. Speculators are taking too much from consumers," Brown said.
Brown has proposed the Energy Markets Emergency Act, which would direct the Commodity Futures Trading Commission to utilize emergency power to eliminate speculation by Wall Street.
Brown was calling for an end to speculators, but other legislators pointed to causes beyond speculation.
"Oil is a commodity, so it goes up and down on the market. You don't hear anybody complaining when speculators drive the price down," said Ohio Rep. Andy Thompson, R-Marietta.
Thompson said he believes the best way to lower the cost of fuel is to increase production of oil domestically, thereby reducing dependence on foreign oil.
A governmental crackdown on speculation would be the wrong approach, Thompson said.
"I hesitate to think government getting involved is ever going to drive prices down. Government getting involved tends to drive prices up," Thompson said.
Marietta resident and U.S. Congressman Bill Johnson, R-Ohio, agreed that production of oil in the United States would be the best path to lower fuel costs.
"By increasing the supply of domestic oil, that's going to have the biggest effect on driving the price of gas down at the pumps," Johnson said.
Johnson also said he believes President Barack Obama needs to approve the full Keystone XL pipeline. So far, only the southern portion of the pipeline has been approved.
The effect that speculation has is unknown, but Johnson noted he was one of 12 Republicans to support an amendment in the House to study the effect. The amendment did not pass.
"We can speculate on how much effect speculation has, but what we know for certain is that when we increase the supply of domestic oil that's what drives the price of oil down," Johnson said.
High fuel costs is of particular concern to companies like Merchants 5 Star.
Starner noted the company currently has about 40 trucks on the roads hauling freight at this time.
In one month's time, the company will purchase about 40,000 gallons of diesel fuel, which for the last 10 to 15 years has been more expensive than regular unleaded fuel.
"(The price of gas) dramatically affects us. It affects every American consumer because everything that you touch has a trucking component to it," Starner said.
Starner noted there is a fuel surcharge that increases with the cost of fuel, but those typically only reimburse about 75 percent of the increased cost of fuel for trucking companies.
He added he does not feel a crackdown on speculators by politicians will necessarily lead to a reduction in price.
"I don't think that our politicians are going to be able to control what's going on in the market place out there, because it's a world market for oil. We're competing against China and India," Starner said.
