Yesterday, Joe Romm testified that Congress should release oil from the U.S. Strategic Petroleum Reserve to pop the oil price bubble caused by speculation and lower oil prices. Romm is the editor of climateprogress.org, and knows what he is talking about: he holds a Ph.D. in physics from MIT and was special assistant for policy and planning to the deputy secretary of energy, who oversaw the SPR. He said that offshore drilling won’t lower prices in the short-term (or even in the long-term), but releasing oil from the SPR will.

Excerpts of Romm’s testimony are below, and his entire testimony is available here.

Let's be clear: The GOP changed the oil speculation rules, allowing people to buy futures who would never use them, specifically to cater to the desires of Wall Street. They clearly never thought of the consequences, and the increase in oil prices is one of those consequences. We've already elsewhere established that today's GOP doesn't understand fiscal responsibility, but it's now also clear that they don't understand economic systems in general.

Today, on CNN, they are touting the 'sixth straight day' of falling gas prices.  

To a lot of uninformed people, like those advocating for drilling in ANWAR right now, that seems like a good thing.  And in our pocketbooks, right now, it will give us some much needed relief.

However, we need to think longer term than next week, or next month.  We should at least be thinking until November, and optimally further out.  Here's why:

Why $110?  Because that is the target price that my market forecasting system uses......which works pretty well, the math for it being borrowed from the science of ballistics (a good bit of finance actually comes from physics-the prominent Black-Scholes model for example)

House Republicans yesterday blocked a move by Democrats that would have spurred exploration for oil in areas in which the oil companies already hold leases. The measure would have also barred oil companies from obtaining new leases if they were not actively exploring for oil in places where they already hold leases. The measure was a ploy by the Democrats, but highlighted the serious flaws in the agenda of the oil companies and their enablers in the US government.

Two months back I wrote about the Oil Speculation Bubble and speculated on what could cause it to burst. I must admit I was pessimistic in my timing despite my own gut feelings that we were going to see it burst sooner rather than later. I had nothing to base that feeling on, and felt it best not to comment on it.

Simply put, and to quote the better of two Bushes, "it's the economy, stupid." We have come to a point where it is impossible for the economies of the industrialized countries to keep up. Emerging economies in smaller nations have rammed a brick wall and are frankly not able to cope. The result has been increases in food prices, electricity prices, and finally in consumer goods.

Most Americans I hear from second-hand sources support drilling. I've heard numbers between 60 to 80%.

I'm guessing most Americans just want oil prices to come down. The problem with drilling right now to help oil prices is that it would take years for it to come on-line.

Therefore, I don't think they support drilling as much as they just want the prices to come down.

The Democratic Party needs to put forward a platform of how to bring oil prices down. I have some perspectives on the matter, which I believe would be worthwhile to explore.

Here is another perfect example where Obama needs to feel the Progressive HEAT. How the kind of  INTERACTIVE campaign I have been writing about using the Internet as the platform can have a major impact on the kind of candidate Obama will be during the General Election and as President if elected.

On or about June 26th 2008 Senator Schumer wrote a letter questioning the viability of Indy Mac Bank. This was before any signicant deposit runs had occured.
During the days following Schumer's letter over $1 billion in deposits were withdrawn. Simple cause and effect without a doubt.
This is probably the most costly statement by any one Senator in the history of the United States.

Yep.  You read it right.
Is this guy crazy – or what??
I mean – oil prices have been hitting records.

By this time next year, oil will have dropped well below $100 a barrel.  Possibly as low as $80.  In the following year it will likely sag even lower.  Why?    Because even though oil is a finite resource, the oil price escalation is a classic example of a speculative bubble – destined to burst.  What’s more, the oil and energy fields – perhaps more than any other fields – have been characterized by boom and bust cycles for more than a century.

The potential impacts for responsible energy use and the environment are calamitous.  Not only will people who predict $200-plus oil be viewed as kids who cry "Wolf!", a collapse in oil prices will also dramatically curtail research and development into alternatives much as happened in the 1980s.

Obama may have no intention of stopping war.  

Phil Gramm recently said, "We have become a nation of whiners." And that this is a "mental" recession. You also have Rush Limbaugh spouting off that 5% of the U.S. carries the other 95%. The Republican party is out-of-touch. The amazing thing, about these statements, is that the GOP is finally being honest about who they are and who they represent. They don’t support the average person. Their base is, as George W. Bush said, "the haves and the have mores."

I just got this letter from Delta, which was signed by 12 airlines, encouraging me to encourage the government to enforce speculation regulations with respect to oil.  It makes me wonder if Big Oil executives are getting phone calls from airlines about to go out of business, car manufacturers that are showing record losses and food retailers who are re-thinking their entire supply networks.  I mention this because when big business gets mad (not the average citizen) things tend to get done.  Chomsky noted this recently with regard to healthcare.  That universal health insurance is on the agenda this year because big companies (not the avergae citizen) are tired of paying for it.  Perhaps now the right pressure will be brought to bear on oil as well.  Here's the letter:

Here are some ways Obama could have won big, politically, on the warrantless wiretapping law.  (Which, for those who don't know, allows the NSA to spy on anyone, any time, with no real court oversight.  See http://www.aclu.org/... if you don't want to read the entire bill.)

(1) Explained, straight up, months ago, that he didn't give a damn about spying, didn't think the Fourth amendment applied to email or phone calls, and was OK with the executive branch spying on anyone any time, and that he would draw the line on something else (torture, habeas corpus, etc.).  That way he wouldn't have disappointed any of us later: we would have known what we were getting.  And he would have looked honest and principled, if not right.

More under the jump.

I don't know why the World Oil Congress is being held in Madrid but, given that it is, the Spanish press has access to the participants. Here's an interview published by El Pais on July 2, in which the Secretary General of OPEC blames everyone except themselves: speculators, US foreign policy, US environmental policy, the subprime crisis, you name it... But he also claims that this is not a supply-and-demand problem as there is no unsatisfied demand. Read below the fold for a point-by-point debunking of his claims.

(Crossposted from European Tribune)

There was a good bit of debate on Capitol Hill last week on what to do to reign in oil speculation.  According to testimony given by Michael Masters before the Senate Committee on Homeland Security and Governmental Affairs, institutional investors are significantly driving up the price of commodities traded on futures markets.

More after the jump:

Dr Housing Bubble has a post on his site which addresses the markets and how the entire market system is on the verge of implosion. As we talk about in "Crazyman's Economics," people have been converting real money into paper money for years, and like the housing bubble, that, too will burst. And unlike a house, if you can't find a buyer for your paper, it's worthless.

There has been a lot of speculation in the media (and from oil producers) about whether speculation in the market is in large part (or in any part) responsible for the recent run up in oil prices. If this is in fact a large contributing factor, who is benefiting financially?