oil speculation.

The Wall Street Surcharge On Your Gas Tank

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gas signHow much are you paying to fuel Wall Street oil speculators? A new, very timely St. Louis Federal Reserve research paper, Speculation in the Oil Market finds 15% of oil price increases are due to speculation and is the second most powerful mover of prices beyond actual physical demand. Demand itself accounts for 40% of the total oil price increase.

Here Comes Oil

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Oil hit $94 a barrel, just in time for the Holidays, and is staying there. Now the blame is coming on speculation, inflation, QE2, the falling dollar and good old fashioned supply and demand. Despite even bills in Congress designed to curb commodities derivatives, the CFTC delayed rules introduced to curb oil speculation. Bottom line, it's back, we had a pause, due to the global economic slowdown, but we appear to be witnessing the return of $100 dollar oil.

Paul Krugman is saying the reason for increasing oil prices is emerging economies and limited resources:

What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices. And America is, for the most part, just a bystander in this story.

A Wall Street Transaction Tax

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There seems to be momentum on the hill to push for a small transaction tax on stocks. The proposal puts a 0.1% transaction fee on every order by total cost.

Consider this a sales tax, although instead of regressive, this puppy is progressive as well as more biased towards institutional large investors. (Hey flat taxers, by philosophy you should love this one!)

Because it is based on transactions, each time a security is bought and sold, those fees will add up on those who make large trades the most frequently. In other words, such a tax would target large hedge funds and institutions making profits off of slight fluctuations, such as those engaged in high frequency trading and derivatives.