Rep. Fred Upton, R-Mich., posted a "Keystone Clock " on his House Energy Committee's website Wednesday. The chairman states more than 1,615 days have passed since TransCanada's Keystone XL pipeline proposal sought approval. Joining Upton's call to build the pipeline is Speaker of the House John Boehner, R-Ohio. Executives at TransCanada have tried a different tactic to try to get approval from the Obama administration by claiming the pipeline won't affect global warming.
The tug of war between economics and environmentalism is escalating thanks to 34 straight days of rising gasoline prices.
Boehner posted a "Running on Empty " graphic Tuesday. The Speaker of the House complains gas prices have "soared $0.43 since Jan. 17" before remarking with his own Keystone clock, "How long will Americans have to wait?"
Boehner cites several sources, including nine Democratic senators, who want Obama to approve the project quickly. The pipeline may not see a decision until mid-June. Around 20,000 jobs and nearly a million barrels of oil a day are at stake for American oil companies.
"Like locusts ravaging fertile crops, gasoline prices are soaring again and eating away at the purchasing power of ordinary Americans. And again, financial speculators appear to be a big part of the story."
Five dollar a gallon gas "is a real possibility" said John Kilduff, partner at Again Capital in New York. "This is partly being driven by the lost refinery capacity of about one million barrels per day...that's a lot."
Kilduff cited Hess's (HES) closure of a key refinery hub in Port Reading, New Jersey in January as a major factor that has sent gas on a tear. "Prices haven't looked back since," he said.
"It's one of about eight refineries that have announced closure. Now the East Coast is heavily reliant on [gas] imports when it used to be self-sufficient," Kilduff stated.
Refinery closures are one part of the puzzle. If speculators have driven up the price of oil (and that is debatable) it's not the speculators who are to blame, but rather the Fed.
By providing massive liquidity and negative real interest rates, the Fed encouraged speculation in the stock market, in junk bonds, and in commodities.
I believe there is a bubble in all of those areas. The Fed's intent was not to foster bubbles per se, but rather to stimulate housing and spur job creation. On the job creation front, the fed failed miserably, and bloated its balance sheet to over $3 trillion dollars in doing so.