More gas pains

According to a couple of market experts, Americans are paying $10 billion a month more for gasoline than they did in December, 2011, not to finance production, but to pay for "homebuilding in the Hamptons and yacht building."

No less an authority than Goldman Sachs notes that speculation in oil futures is adding almost $24 to the price of a barrel of oil.

As Forbes reporter Robert Lenzner notes, [E]ach million barrels of speculation in the oil futures market adds about 10 cents to the price of a barrel of oil, this means that in theory the speculative premium in oil prices due to speculation is as much as $23.39 a barrel in the price of NYMEX crude oil.

In turn oil analysts believe that every $10 rise in the price of crude oil translates into a 24 cent rise in the price of gasoline at the pump. Using the 24 cent rise in the price of gasoline suggests that each dollar increase in a barrel of oil equals about $.56 per barrel.

So, if a barrel of crude oil is $23.39 higher because of speculative action in the commodity markets– this translates out into a premium for gasoline at the pump of $.56 a gallon. Since gasoline in the northeast is about $3.68 a gallon, this suggests that without any speculation, the cost of a gallon would be only $3.12. . . .

Merrill Goozner, writing in Fiscal Times, delves into this further.

Later,

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