Analysts Say Gasoline Prices Would Fall to $2 if Congress Acted

Posted by Patrick O'Connor on 6/23/08 1:33 pm

Election-year hyperbole may have hit higher highs today when four analysts told Congress that retail gasoline prices would drop to $2 and oil to $65-$70 if Congress would pass new laws aimed at speculators in the energy markets.

MarketWatch

The price of retail gasoline would fall by half, to around $2 a gallon, within 30 days of passage of a law to limit speculation in energy markets, four energy analysts told Congress on Monday. Testifying to a House Energy and Commerce Committee subcommittee, Michael Masters of Masters Capital Management said the price of crude oil would drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135. Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy agreed with Masters' assessment at the hearing. Other witnesses say speculators aren't a major factor in oil prices, however.

Tell us your opinion. Do you think limiting speculators in the energy markets would drive prices down by 50%?

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• Comments (2)

Posted by Gary55 on 6/24/08 8:09 pm

I’d be very surprised if limiting “investors” in the energy markets could have that dramatic an effect (50%). Given the growth in emerging markets, clearly world demand is up substantially over the past few years and that has driven prices higher. That said, I’m also aware that the number of investors and more importantly, the amount of money going into oil futures and oil ETF’s has also risen dramatically in the past few years. Any time a market with a relatively limited supply attracts a greatly increased number of investors there is by definition a greater demand leading which leads to higher prices.

I think it’s rather silly for Congress to be looking for someone to blame for the higher oil prices. It’s our capitalist system at work. Yes, new regulations should be put in place to prevent damage to the world economy, but that doesn’t imply there is a “bad guy” out there. The system has shown us a weakness to be addressed and we must address it.

My GUESS is that limits may take 20% or so out of current gasoline prices.

Posted by aWriter on 7/19/08 6:10 pm

Yes, there is a bad guy, several in fact. The bad guys don’t want drilling in the USA so they can force us to put sails on our cars or just walk or ride bicycles. The day that the govt allows drilling, even if it didn’t start for a year or two, the incorrrectly maligned speculators would dump their oil futures. Just look at the last 2 mkt days, ie, July 17 & 18, 2008. Lotsa conversations about opening up drilling and, bingo, the price of oil drops. This keeps up and gasoline prices will drop. But do we have capitalism now? No, we have a badly mixed economy.

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