Gas Price Hits Record High; Senate Committee Looks Like Fools

Gas Price Hits Record High; Senate Committee Looks Like Fools And American Business Is In Russia This Weekend Planning For An Even Bigger Worldwide Screwing.

Do you ever get the feeling that the Congress is totally useless, totally out of the loop, totally incompetent or bought off?

NEW YORK (CNNMoney.com) -- Gasoline rose to a milestone mark Sunday as the national average compiled by motorist group AAA reached $4 a gallon for the first time.

The average price of gasoline jumped up another 20 cents a gallon in the past three weeks to a record-breaking $4.00 a gallon for self-serve regular.

The milestone was expected after a surge in crude oil prices added more than $16 to a barrel of oil over the last 2 trading days. Crude settled at a record $138.54 a barrel Friday, up by $10.75, after setting an all-time intraday high of $139.12.

The $10.75 gain was the biggest one-day advance in dollar value ever, nearly doubling the previous mark of $5.49 set Thursday. Weakness in the dollar, geopolitical concerns and an analyst's prediction of $150-a-barrel oil by July 4 helped spur Friday's advance.

The average price is $4 a gallon or more in 14 states and the District of Columbia, according to the survey. California pays the most for gasoline, averaging $4.436, with Alaska and Connecticut both at $4.296. Other states above $4 are Hawaii, Illinois, Massachusetts, Maine, Michigan, Nevada, New York, Oregon, Rhode Island, Washington and West Virginia. The area with the highest average gas prices was Stockton, Calif., which posted $4.41 per gallon.

The price of diesel fuel, used by truckers hauling goods across the country, rose 0.8 cent to $4.762 a gallon.

On its Web site, AAA says the information is gathered by Oil Price Information Service based on credit card swipes at 85,000 gasoline stations across the nation.

Soros Gives The Senate Commerce Committee A Lesson and They Look Totally Blank Faced and Stupid. I Watched The Hearing and I felt Sick! (ed.)

WASHINGTON: The growth of funds designed to mimic the price of crude oil and other energy futures is reminiscent of a similar craze that precipitated the stock market crash of 1987, billionaire financier George Soros told lawmakers Tuesday.

The surge in popularity of commodity index funds is "intellectually unsound ... and distinctly harmful in its economic consequences," Soros told a Senate hearing. When speculators enter a market mostly on one side — in this case, betting on rising oil futures — it "distorts the otherwise prevailing balance between supply and demand."

He likened it to the rush to invest in portfolio insurance more than 20 years ago. When those investors tried to exit the market at the same time, stock markets around the world crashed.

Soros said he has spent years studying market "bubbles" that begin with a trend based in reality, but are then followed by some misinterpretation of that data. He sees no imminent crash in oil prices, however, and said a decline in consumption will not occur unless the U.S. and other developed nations' economies fall into recession.

"That makes it desirable to discourage commodity index trading while it is still inflating the bubble," Soros said. He has urged regulators to improve market oversight and to place limits on speculative positions.

Crude prices have risen more than 42 percent since early December and were trading near $127 a barrel Tuesday morning. U.S. gasoline prices are nearing a national average of $4 a gallon ($1.05 a liter), up from about $3.16 a year ago.

The U.S. Commodity Futures Trading Commission last week said it was six months into a probe of U.S. oil markets focused on possible price manipulation. The commission said it is investigating potential abuses in the way crude oil is purchased, shipped, stored and traded nationwide.

The CFTC said it would immediately require monthly reports from large institutional investors with a dual goal of quantifying such index trading and ensure it was "not adversely impacting the price discovery process."

But Sen. Maria Cantwell on Tuesday said the CFTC's latest actions do not go far enough and that the agency must fully regulate all trading of U.S. energy products and close foreign-based trading loopholes.

"It is abundantly clear to me that the CFTC is not doing everything it can to protect American families and businesses from the possible oil price manipulation," Cantwell said, adding that if the commission does not do so on its, she will introduce legislation to force them to do so.

Sen. Byron Dorgan noted that the CFTC's staff is roughly 10 percent smaller than a few years ago, while commodity trading has exploded.

A CFTC spokesman was not immediately available Tuesday morning.

Manufacturers feel the squeeze from high oil costs

Record oil prices knock down Asian shares

West's business elite swarm to Russia's honey pot this WEEKEND!

ST. PETERSBURG: The lineup told it all about Russia's importance today. There, rarely on one stage, sat the chief executives or chairmen of BP, Royal Dutch Shell, Chevron, Exxon Mobil, ConocoPhillips, Total, Schlumberger and Dow Chemical, plus the chairman of the Russian energy giant Gazprom and the president of the Russian oil company Lukoil.

The busy big men of energy, accustomed to jetting around the globe, seemed scarcely to believe themselves that they were all in one place, and, indeed, in this place, a conference center on the Gulf of Finland, in the grand capital that Peter the Great forged from the swamps 300 years ago.

While Alexei Miller of Gazprom exuded pride (that, too, characteristic of today's Russia) at attracting such a group to his hometown, Andrew Gould of Schlumberger, which provides equipment to extract oil and natural gas rather than doing that job itself, voiced some concern this weekend at being with "six of my top 10 customers at the same time."

Regardless of the conflict over BP's partnership with some of Russia's most ambitious billionaires - a conflict that a senior government official suggested Sunday could end badly for the British oil giant (Page 12) - big Western businesses seem here to stay, swarming around the Russian honey pot for large contracts and access to its resources.

And if politicians in Western Europe fret over their own inability to develop a cohesive energy policy - and some fan fears of a newly resurgent, aggressive Russia, and Gazprom, as a result - many of the sharpest minds gathered here at the St. Petersburg International Economic Forum seem focused on something quite different: ensuring that, this time, Russians benefit from economic plenty.

Jim O'Neill of Goldman Sachs, who coined the phrase "BRIC countries" to describe Brazil, Russia, India and China becoming leaders among world economies, surprised the crowd by predicting a conservative overall average of 3.3 percent annual economic growth by 2020.

Russia, he said, would have a 4 percent share of world gross domestic product, compared with 2 percent now, but weaker relative to Brazil, India and China because of far fewer people at work (India alone would grow by 300 million people - twice Russia's current population - by then).

Michael Klein, chairman and chief executive of the institutional clients group of Citigroup, was ebullient: "The future will exceed by a big stretch the plans for 2020" - the government target date for certain improvements. "Russia is clearly one of the most successful economic stories of the decade," and possibly "the first scale economy to sustainably avoid the resource curse," the evils often brought by easy money from such fast-rising commodities as oil and natural gas.

Anatoly Chubais, despised by poorer Russians for the way he privatized the economy in the 1990s but a clever survivor of politics and business here, even broached a subject normally taboo: the moribund, regimented state of politics, which have crystallized around the Kremlin and Vladimir Putin, the prime minister and last president (who this weekend left his protégé, Medvedev, to shine alone in their hometown).

"We can't avoid discussing the political component of the state's impact on the economy," Chubais said in careful language. "The state must be judged from the point of view of quality of services that it provides for the country as a whole. In my understanding, it is impossible to evaluate the quality of this service without real give-and-take and a truly competitive political mechanism."

If the big energy men gathered on Saturday had a clear worry, it was this: that the huge investments they must make to get to Russia's oil and natural gas would fail to yield returns because the government changed the rules, as happened, most recently, to Shell over Sakhalin Island and may now be happening to BP. In both cases, the Kremlin asserts that it has not interfered directly.

But, like some Europeans in the military and energy spheres, the companies are wary.

Russia, emphasized Rex Tillerson, chairman and chief executive of Exxon Mobil, "must improve the functioning of its judicial system, and its judiciary. There is no respect for the rule of law in Russia today."

In both cases, differences stretch back beyond the past decade of prosperity to the 1990s. In the West today, some paint Russia as newly defiant of NATO expansion, ignoring that Russia in the 1990s did, too, but was too weak to be convincing.

As Klein of Citigroup put it, for the West, the 1990s was the "period of transformation in Russia," when Communism crumbled and free markets and democracy got their start.

Russians, Klein suggested, preferred to emphasize the radical changes of the 2000s. But these successes are based on the export of such basic resources that Western consumers, attuned to China's conspicuous brands and advances, are almost suspicious, he said. "The High Street and Main Street do not understand the Russian achievement."

In the same vein, Miller of Gazprom said he found it "simply astounding" that anyone should fear its advance from energy supplier into direct delivery to European customers.

Misunderstanding has plagued Russia's complex relations with the outside world for centuries. In St. Petersburg, Peter's window to the West, this weekend produced a royal show of at least momentary unity, foreign and Russian business elites plunging together into a world where their money might talk even louder than the missiles and military prowess from which Russia traditionally has drawn strength.

Do you ever get the feeling that the Congress is totally useless, totally out of the loop, totally incompetent or bought off?