August 21, 2008 (Washington, D.C.) – The fact that crude oil shot past $120 a barrel despite decreased demand and increased supply clearly demonstrates that speculators continue to dominate the commodities markets at the expense of our national economy, petroleum marketers said today.

“There is absolutely no economic reason for prices to increase the way they did today,” Dan Gilligan, the president of the Petroleum Marketers Association of America, said. “The commodities market is disconnected from reality and economic fundamentals like supply and demand are brushed aside. Speculators are in the driver’s seat and they’re driving our economy right over the cliff.”

The U.S. Department of Energy (DOE) announced recently record supplies of crude oil for the week ending August 15, with a reported climb of 9.4 million barrels, and gasoline demand averaged about 9.5 million barrels per day during the last four weeks – 1.6 percent lower than the same period last year – the federal Energy Information Administration (EIA) said yesterday.

In a free market, Gilligan said, a surplus of supply like the one signaled by the DOE and EIA announcements would trigger a slump in prices.

Instead, prices rose dramatically – proof positive, Gilligan said, that speculators have too much influence on prices.

Gilligan pointed to a recent Washington Post analysis of data obtained from the Commodity and Futures Trading Commission (CFTC), the agency ostensibly charged with regulating the energy markets, which shed new light on the extent to which speculators dominate the energy market.

The Post analysis showed that speculators control no less than 81 percent of the oil futures contracts traded on the New York Mercantile Exchange (NYMEX) market.

Moreover, the CFTC recently released data showing that at one point in July, a single firm controlled 11 percent of the NYMEX oil futures contracts. That is equivalent to 460 million barrels of crude – nearly a month’s worth of U.S. oil consumption.

Some market watchers also credited today’s oil move the signing of the US-Poland missile defense agreement, which will intensify Russian-American relations.  However, the market was down on news of the Russian invasion of Georgia two weeks ago, despite the threat it posed to the major European oil pipeline located there.

"What the speculators have done today is going to hit the U.S consumer squarely in the wallet in a day or two, Gilligan said. “This microburst of trading provides excellent evidence that Congress must move legislation to address this issue as soon as possible."