Though oil demand is at its lowest since 1997, oil prices (and gas prices along with them) are once again on the rise and the GOP wants even more handouts to Big Oil. 

Analysts project that gas prices will top $4 a gallon nationally and perhaps reach record highs later this year.  Despite relatively low demand and surging production levels in the U.S., prices are rising due to a variety of factors, including instability in the Middle East, but even more so, unregulated Wall Street speculation.

Historically, financial speculators accounted for about 30 percent of oil trading in commodity markets, while producers and end users made up about 70 percent. Today it's almost the reverse.

"On Tuesday," according to reporting by McClatchy's Kevin G. Hall, "Oil [prices] rose past $106 a barrel and gasoline averaged $3.57 a gallon — thanks again in no small part to rampant financial speculation on top of fears of supply disruptions. Because speculators dominate the market, their predictions of higher oil prices -- which were rampant on Tuesday -- can make their prophecies self-fulfilling."

Hall's report highlights the fact that despite rising prices at US gas pumps, demand in the US was so low it has "become a net exporter of gasoline, unable to consume all that it generates."

This fact contradicts the familiar refrain from GOP politicians and operatives who claim that the Keystone XL pipeline is absolutely needed to solve US energy woes or would lead to lower prices for consumers.

Financial speculators are "piling into the market, torquing the Iranian fear factor into ever-higher prices... oil's price shot up because it trades in financial markets, where Wall Street firms and other big financial players dominate the trading of oil, even though they have no intention of ever taking possession of the oil whose contracts they are trading..."

In short, oil prices are inflated due to speculation....and speculation is now part of the DNA of oil prices, not supply and demand.
Fadel Gheit, a 30-year veteran of energy markets and an analyst at Oppenheimer & Co. says, "These people are not there to be heroes. They are there to make money. It's our fault because we are allowing them to do that. Obviously these people are very strong, and the financial lobby is the strongest of any single lobby. I've been in this business 30 years, and I can tell you I think this is smoke and mirrors."

For their part, Republicans have latched on to these rising prices as proof that President Obama has pursued an “outrageously anti-American” energy policy.  As with most other overheated conservative attacks on the president, the facts don’t line up in their favor.

Here are FIVE Key Facts about Rising Gas Prices, the GOP, and Big Oil.

1. Domestic Energy Production Has Soared Under President Obama: The number of oil drilling rigs in the U.S. hit a record last week, having quadrupled in number over the past three years. Between oil and gas drilling rigs, the U.S. now has more rigs at work than the rest of the world combined.  The current oil boom has buoyed the projections of some leading oil industry analysts:

“It’s staggering,” said Marshall Adkins, who directs energy research for the financial services firm Raymond James. “If we continue growing anywhere near that pace and keep squeezing demand out of the system, that puts you in a world where we are not importing oil in 10 years.”

2. President Obama Has Taken Huge Steps to Reduce Our Dependence on Oil: In addition to overseeing a dramatic increase in domestic energy production (including from renewable sources), the president has also taken steps to reduce the amount of oil we consume.  Most notably, new modern standards requiring cars and light-duty trucks to achieve an average fuel economy rating of 54.5 miles per gallon will cut U.S. oil use by 2.2 MILLION barrels of oil per day by 2025 — a move that will save consumers $1.7 TRILLION and also cut greenhouse gas pollution by 6 BILLION metric tons.  The 54.5 MPG standard by 2025 builds on an earlier Obama administration policy to increase fuel efficiency to 35.5 MPG by 2016, a one-third improvement to fuel economy standards that had previously languished in neutral for more than 20 years. Even as gas prices are rising, Americans’ cars are becoming significantly more efficient.

3. Big Oil Made a Record $137 BILLION in Profits Last Year: Just the five largest oil companies — ExxonMobil, ConocoPhillips, BP, Chevron, and Shell — booked a combined profit of $137 BILLION in 2011, even though these companies produced 4 percent less oil in 2011.  And of course Big Oil’s record profits are directly related to increasing pain at the pump for American consumers.

4. Republican Politicians Oppose Ending Taxpayer Handouts to Big Oil: Every Republican presidential contender and nearly every Republican member of the House and Senate has signed a pledge to oppose ending taxpayer handouts to Big Oil — handouts that will add up to more than $40 BILLION over the next ten years.  In addition, Republicans have repeatedly voted in lockstep to block efforts to repeal the tax giveaways to Big Oil.  President Obama, however, remains undaunted and has once again included repeal of these wasteful giveaways in his budget for 2013.

5. Republican Politicians Want to Cut Big Oil’s Taxes Even More: Both the House Republican budget plan released last year (and supported by nearly every Republican member of the House and Senate) and the tax plans of every GOP presidential contender call for cutting the corporate tax rate by one-third or more.  This huge tax cut could result in another big windfall of billions of dollars for Big Oil.  By contrast, President Obama has proposed closing wasteful tax loopholes and wants to clamp down on the use of foreign tax shelters (ExxonMobil uses at least 20) that allow huge corporations to avoid paying their fair share in U.S. taxes.

In summary, instead of giving billions more in handouts to Big Oil despite the industry’s record-breaking profits, President Obama has presided over a dramatic increase in domestic energy production coupled with unprecedented efforts to decrease Americans’ spending at the pump by modernizing fuel economy standards.

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