As gas prices skyrocket, attention has turned to public "pits," where brokers trade "oil futures" - the right to buy or sell crude oil at a specific price, on a future date.
But far away from the hue and cry, hundreds of millions of barrels of oil futures contracts are traded electronically every day, CBS News chief investigative correspondent Armen Keteyian reports.
More than 30 percent, experts say, exchanged in so-called "dark markets," the exact size and scope unknown to U.S. regulators.
"If you can trade out of the sight of U.S. regulators, you can manipulate these markets," said Michael Greenberger, a former top staffer at the Commodities Futures Trading Commission, or CFTC, which regulates the trading of commodities like oil in this country.
He recently told Congress that speculation is placing a huge premium on the price of oil.
"How much per barrel?" Keteyian asked.
"Well, there have been various estimates - anywhere from 25 percent to 50 percent," Greenberger said.
"People can actually corner the market and drive up the price," said Sen. Maria Cantwell, D-Wash. "When there is no policeman on the beat, you know that crime can go up."
More and more fingers are pointing at one of the least-known but most powerful foreign exchanges - the InterContinental Exchange, or ICE.
By the end of 2007, the all-electronic exchange accounted for nearly a 50 percent market share of all global oil futures contracts, a total of 138.5 million contracts - up 49 percent from 2006.
I don't know about you, but the idea that 50% of the price may be from speculation alone indicates to me that the industrialized countries of the world better get a firm grip on this issue and put a stop to it. When speculators run up prices like this, the bursting of the bubble that invariably happens on the other side of this thing is usually very painful.
Thank God we have an oil man in charge who knows the issues:
President Bush plans to make a renewed push Wednesday to get Congress to end a long-standing ban on offshore oil and gas drilling, echoing a call by GOP presidential candidate John McCain.
Congressional Democrats have opposed lifting the prohibitions on energy development on nearly all federal Outer Continental Shelf waters for more than a quarter-century, including waters along both the East and West coasts.
With oil prices soaring and motorists paying $4 a gallon for gasoline, political pressures have been growing for more domestic oil and gas production.
You mean the $4 a gallon he didn't see coming? You mean, instead of using less oil that drilling for for more oil is the solution? Except that it isn't because there isn't enough oil that could be pumped out to make a difference?
Get control of the speculation and you'll bring the prices down, considerably. And while we're doing that, we need to figure out how to reduce our dependence down to zero by using less, not by ruining the environment, trying to pump a small amount that won't solve the problem.
--WS
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