Category: News & Opinion

Hydrogen Hubs: How This New Boondoggle Will Cost Us Billions

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ClimateNews & Opinion

by Mia DiFelice

It may start with tanker trucks rolling past your neighborhood; a nondescript warehouse; a bold announcement from your governor, or a small press release in your local paper — your city is preparing to become part of a hydrogen hub. 

So what exactly does this mean for you, your neighbors, and the climate?

In 2021, the Infrastructure Investment and Jobs Act created a pot of $7 billion to fund the development of hydrogen hubs (H2Hubs). In the coming years, the Department of Energy will distribute those funds to at least six proposals, submitted by state or regional coalitions.

Proponents proclaim the H2Hub program is central to our country’s “low-carbon” future. But they are ignoring or hiding hydrogen’s many problems — from its health and safety risks, to its bogus climate credentials. 

The Endlessly Dirty Possibilities of a Hydrogen Hub

Though H2Hub proposals vary widely, they all entail networks of production, transport, storage, and end-users for hydrogen. Some of the proposed projects could sprawl across several states; for example, through thousands of miles of pipelines for liquid hydrogen or hydrogen-derived ammonia. 

Hydrogen or ammonia could end up at fertilizer corporations, oil refineries, heavy-duty transport companies, power plants, and more. Some proposals even suggest exporting hydrogen and ammonia, creating new global markets for what are essentially fossil fuels.

Hubs will also differ by the feedstocks used to make hydrogen. Notably, DOE’s program requires at least one hub to use natural gas, and at least two built in a “natural gas-rich area.” 

This would include hubs using industry-branded “blue hydrogen.” Boosters claim blue H2 is “carbon neutral” because it combines gas-powered hydrogen production with carbon capture technology, designed to grab CO2 emissions and store them underground. 

However, carbon capture has never worked reliably or at scale. And even if this fairy tale did deliver, it wouldn’t be good news. Lifecycle emissions of “blue hydrogen” are actually worse for the climate than burning coal. Moreover, “blue hydrogen” would create more pollution from fracking and pipelines.

So it’s no surprise that dirty energy companies have flocked to hydrogen development and H2Hub proposals. Facing blowback from broken promises and dangerous pollution, they are now using hydrogen to greenwash and create new markets for fracked gas.

At the same time, DOE requires only one of its H2Hubs to produce renewables-based hydrogen. But even so-called green hydrogen has a dirty underbelly, including its huge costs and unsustainable water consumption. It doesn’t live up to its climate claims, either, as it diverts renewables on the grid to less-efficient hydrogen production.

How an H2Hub Could Shake Up the Ohio River Valley

The Ohio River Valley is home to Pennsylvania, Ohio, West Virginia — and a H2Hub proposal. Centered in West Virginia, the applying coalition includes EQT, a Pittsburgh-based gas company, and Chemours, a spin-off of chemical giant Dupont. 

Nationwide, H2Hub proposals have spurred policies to make applicants more attractive to hydrogen business. The Ohio River Valley is no exception. Recently, Pennsylvania passed $1 billion in tax credits to any facility that becomes part of a H2Hub.

But here’s the catch: any facility in the hub can claim a credit for hydrogen as well as fracked gas. Pennsylvania’s Governor Wolf claimed that the gas credit is for a “bridge” phase that should last only “a year or two,” before hydrogen goes completely renewable. Yet, the law allows companies to claim the gas credit for two decades. 

What’s more, this Pennsylvania credit adds to the flood of subsidies hydrogen producers can claim via the Inflation Reduction Act.

A H2Hub in the Ohio River Valley, and anywhere, is a risky bet on a huge buildout of doubtful technology. Residents would be stuck with the pollution, and taxpayers would be stuck with the bill.

H2Hub grants could cover, at most, 50% of a project’s cost — the rest would fall to private companies and other public sources. That includes taxpayers, through subsidies like those in the Inflation Reduction Act and Governor Wolf’s measure.

Plus, for hubs that include power production, utilities could pass the cost of new hydrogen infrastructure onto ratepayers. By one estimate, higher taxes and utility rates would cost Pittsburgh households at least $1,000 a year if a hub came to Western Pennsylvania. 

“Permitting Reform” Threatens to Fast-Track H2Hubs 

In late 2022, so-called permitting reform dominated debate in Congress. While proponents argued that we need permitting reform for clean energy buildouts, we know it’s really about fast-tracking fossil fuel infrastructure — including hydrogen projects.

A leaked early draft proposal bore the watermark of the industry group American Petroleum Institute, which seems to have majorly swayed the proposal. 

Massive public opposition blocked the proposal from passing this year. But as many Congressmembers are prioritizing it this year, we’re staying vigilant. Proposals like those bearing an API watermark would not only grow fossil fuels — it would drive even more pollution and emissions through fast-tracked hydrogen hubs.

Hydrogen Hubs Distract From Real Climate Solutions

DOE won’t announce the H2Hub grant recipients until later this year. It will then take years more for projects to come online. However, the program is only part of a bigger buzz around hydrogen. 

Projects across the country are already in motion, including hubs that could move forward without DOE funding. Those projects count venture capitalists, huge corporations, state universities, and more among their backers and developers. They’ll also rely on federal and state subsidies to boost profits.

But we can’t let these projects go through without a fight.

Ultimately, H2Hubs will be expensive and resource-hungry, especially for energy and water. A buildout will fleece taxpayers while doubling down on dangerous pollution in frontline communities. 

At the same time, H2Hubs could entrench our fossil fuel dependence and distract from real climate solutions. By worsening the climate crisis, they’ll threaten our food and water, too.

We know how to fight climate change, and it doesn’t involve expensive, polluting technologies backed by Big Oil and Wall Street. Instead, we need bold plans to phase out fossil fuels and replace them with clean, renewable energy.

People need to know: we don’t need expensive, polluting hydrogen hubs. We need renewables, now.

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Food & Water Action Propels Candidates to Victory Throughout 2022

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DemocracyNews & Opinion

by Mia DiFelice

This November, voters returned to the polls. While dozens of senators and hundreds of representatives campaigned for national seats, thousands more jockeyed for state and local offices. These midterms were full of make-or-break elections that stood to shape the path toward our collective future.

For months prior to those elections, Food & Water Action mobilized with allies around the country. We helped elect leaders committed to bold action on everything from climate, to corporate greed, to environmental injustices. And we could not have done it without our organizers, volunteers, and members.

As we prepare for the long work still ahead, we’re taking a moment to look back on all the progress we’ve made. Here are just a few of the victories we will build on in 2023.

1. An Early Win For a Climate Champion in New York

At Food & Water Action, we know that significant races for climate progress come at all levels, not just national. After years of work in the New York State Assembly, it was time to shake things up.

Though New York banned fracking eight years ago, lawmakers have dragged their feet on measures to pull the state into a fully renewable future. Despite momentum in the legislature, leadership failed to pass key bills that would have made huge progress on this front. 

So this year, we rallied support for Democratic challengers who walked the walk, not just talked the talk. 

In the Hudson Valley, we threw our weight behind climate activists like Sarahana Shrestha, who helped lead the victory to shut down a Danskammer fracked gas plant. 

In June, Shrestha won a different kind of victory, unseating 23-year incumbent Kevin Cahill. While Cahill took thousands of dollars in donations from fossil fuel companies over his career, Shrestha won with zero corporate donations. She then carried her victory into the general election by an easy 20 points. 

As she prepares to take office, we have sent a clear message: we can and will unseat those who slow-walk climate action. We can and will get out the vote for candidates who commit to bold solutions. And those candidates can and will win general elections.

2. Fighting Pipelines at the Ballot Box in Iowa

Over the past few years, Iowa has become a key site in our fight for clean water, a livable climate, and an end to polluting industry. Right now, the state faces a buildout of thousands of miles of hazardous pipelines — with or without landowner consent. 

Despite a broad and vocal coalition opposing the projects, key state lawmakers blocked legislative action. So it was no surprise that pipelines became a major issue in this year’s midterms. Our polling found that 73% of voters were less likely to vote for candidates who support the projects.

And that opposition crystallized with the election of our endorsed candidate in the State Senate, Sarah Trone Garriott. This year, Garriott faced a redistricting that put her head-to-head with Senate President Jake Chapman — the same Senate President who blocked multiple bills that would have stopped pipeline projects in their tracks. 

Sen. Garriott committed to choosing constituents over corporations and vocally opposed carbon pipelines. So we went big on our support for her, knocking on more than 7,000 doors and mobilizing more than 1,000 phone calls and hand-written letters to voters. 

Her victory is a victory for everyday Iowans who are done with polluting industries. That includes not only pipeline corporations, but factory farms. Garriott also supports a state factory farm moratorium, which has become increasingly urgent as Iowans suffer a growing flood of factory farm pollution in their backyards. 

3. Bringing Blue-Wave Sea Change To Pennsylvania

Pennsylvania was a critical state in this year’s midterms for many reasons. For one, it’s the second-highest gas-producing state in the country. With the right elected officials, we can keep a lot of gas in the ground. For another, the purple state had a make-or-break impact on the Democrats’ Senate majority. 

So we started local, endorsing two key races for the House in Southwestern Pennsylvania: those of Chris Deluzio, a progressive champion for workers, and Summer Lee, the only candidate in her primary to unequivocally oppose fracking. 

Throughout the state, we turned out more than 220,000 phone calls, knocked on 20,000 doors, and sent 4,600 handwritten letters to get out the vote. As a result, not only did Deluzio and Lee win their races; our efforts also mobilized thousands of Pennsylvanians to vote blue in the tight races for governor, state legislature, and the U.S. Senate.

Now, the PA State House has a Democratic majority for the first time in 12 years. What’s more, at the national level, John Fetterman’s win helped maintain the Democratic Senate majority. With these victories, we have a baseline for crucial work coming down the line. 

With Your Help, We Have Plenty of Victories Ahead

In the run-up to the midterms, pundits predicted that a “red wave” would crash through Congress. But with the work of thousands of organizers and volunteers, we turned that “red wave” into a puddle. 

Our get-out-the-vote efforts turned out more than 433,000 phone calls and 8,760 handwritten letters to voters across the country. At the same time, our canvassers knocked on more than 27,000 doors nationwide. 

The result: we helped keep Demorats’ control of the Senate and reduced Republican gains in the House to a barely-there majority. We also rallied support behind a growing contingent of progressive lawmakers like Lee and Shrestha. These victories will open new possibilities for clean water, safe food, and climate action in the years ahead.

Already, we are preparing for the next election cycle. It won’t be an easy battle. The growing number of extremists in the House and former-President Donald Trump’s entrance into the 2024 presidential race make that clear. But it’s a battle that we’re ready for, with your help.

All Giving Tuesday gifts are now matched $4-to-$1. That’s five times the power to protect our planet in 2023 and beyond!

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How We Keep Fighting After These Midterm Results

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DemocracyNews & Opinion

by Mia DiFelice

The midterm results are in: Democrats have kept their Senate majority, and Republicans will likely hold a majority in the House.

While these midterms didn’t deliver everything we hoped for, we still saw victories for Food & Water Action, our members, our supporters, and our allies. Nationwide, thousands of us joined millions to demand a progressive future for our country. One that will put people and the planet before greedy corporations. 

We have worked for more than a year to ensure the victories we saw this week, and we will keep working, as long as we need to, to secure a livable future for all. 

Against All Odds, We Have So Much to Celebrate

Food & Water Action began its work in every race with the same overarching goal in mind: Elect a candidate who will stand up for the issues we care about. A candidate who will work to secure safe food, clean water, and a livable climate for everyone.

This year, the odds were stacked tall against us. Historically, the winning party in the previous presidential race has rarely kept both seats in Congress in the following midterms. Pundits predicted we would see a “red wave” this year. But thanks to our work and your support, we shrunk the widely-predicted “wave” into a puddle. 

While Republicans will barely squeak in a House majority, the Senate held blue — a result others thought impossible.

Our work blocked many extremists, climate-deniers, and corporate-backed cronies from gaining power in Congress. And with a Senate majority, we can advance a climate agenda in the next two years. 

How We Defended Our Democracy and Our Planet

In the run-up to the midterms, we mobilized voters in key districts across the country. Our members and volunteers made calls, wrote letters, and knocked on more than 27,000 doors . 

Of those, 20,000 were in Pennsylvania. When we began strategizing, we quickly realized that the state was full of make-or-break races. So we threw our weight behind progressives in important districts, endorsing Summer Lee in PA12 and supporting Chris Deluzio in PA17. 

For the two candidates combined, we mobilized 202,000 calls to voters in their districts. Our members and volunteers sent out 3,000 handwritten letters to get out the vote on Lee’s behalf. And, on election day alone, we secured commitments from more than 700 voters to send three friends to the polls.

Not only did both Lee and Deluzio win their races — Pennsylvania saw its own blue tide. Our work helped turn out folks voting blue down the ballot. The state now has a Democratic governor and inches toward a Democratic State House.

Moreover, John Fetterman’s win for PA’s second Senate seat helped clinch Democrats’ majority. Now, they have the chance to strengthen that majority in Georgia’s December runoff election.

Wins like those in Pennsylvania bring us closer than ever to real climate action. They also show that leaders with bold visions, advocating for bold solutions, can and do win. Progressive victories across the country send clear signals that voters want real change, now.

Beyond These Midterm Results, We’re Continuing the Fight

We’re taking a moment to celebrate the victories, but we know our fight is far from over. Every day, the planet becomes more unlivable. Every day, industries spew pollution into our air and our waterways. Corporate greed still has a stranglehold on our economy. Prices continue to rise and company profits reach historic highs. 

With so much on the line, we are jumping right back into the fray. First, we’ve already begun working with allies in the House and Senate to keep extremism in check. Just as importantly, we’ll continue working with communities across the country to block fossil fuel projects and keep oil and gas in the ground.

We’re also mobilizing people to push President Biden toward decisive action. His executive authority can move us forward on addressing the critical threats we face. From cutting down climate pollution, to protecting our water, to holding greedy corporations to account, Biden has the power to deliver for everyday workers and families. 

Finally, we know that the growing extremism in the House underscores the challenges we will face in the 2024 election ahead. That’s why Food & Water Action is setting a long-term strategy to secure a Democratic government. We are working toward a Congress and administration that will help us achieve a livable future for all. 

At this moment, we cannot accept anything less.

With your help, we can take on what comes next.

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MIDTERM ELECTION UPDATE: Victories Amid Uncertain Results

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DemocracyNews & Opinion

by Mia DiFelice

In the morning after election day, several Senate races and dozens of House races remain undecided. Though we don’t yet have final results, nor a complete picture of which party will control Congress, one thing is absolutely clear: we stopped the predicted red wave. Democrats won key races across the country, and the relentless work of Food & Water Action and our dedicated members and volunteers made a real difference. 

Last night showed a historic rejection of the regressive forces that were desperately trying to claw their way back to power. Voters across the county said “No!” to corporate shills, climate deniers, and would-be authoritarians bent on undermining American democracy. 

Food & Water Action is proud to have stood at the center of this battle for the future of the country. And we are excited to see our endorsed and supported candidates prepare to enter the halls of Congress, several for the first time.

In the months before the midterms, Food & Water Action and our allies rallied behind progressive candidates and drove voters to the polls. Thousands of our members and volunteers joined this effort, making nearly 500,000 calls to voters and knocking on more than 27,000 doors across the country. Our work has paid off in key races across the country. Here are just a few:

John Fetterman Turns Pennsylvania Senate Seat Blue

In an evenly divided Senate, we knew that every opportunity to flip a seat mattered. Not only did we have to keep the majority — we had an opportunity to make Sen. Joe Manchin (D-WV), the conservative tie-breaker, irrelevant.

In a huge get-out-the-vote effort, our organizers knocked on 20,000 doors and made 220,000 calls in Pennsylvania. We also secured more than 1,000 commitments from voters to call on at least three friends to make their voices heard at the polls. 

While the fate of the Senate remains unclear, John Fetterman’s win vastly improves Democrats’ odds of keeping their majority there, and even making Manchin irrelevant. 

Chris Deluzio Clinches PA Battleground District

Pennsylvania’s 17th District saw a battleground race between a Republican corporate exec and Democratic newcomer Chris Deluzio. Food & Water Action knew early on that this race would be crucial. By election night, our volunteers and members knocked on 20,000 doors and generated more than 92,000 calls to voters in this district. 

Deluzio ran to defend democracy, unions, and working families. On the campaign trail, he’s promised to take on corporate power and grow union jobs in clean energy. Clearly, his message resonated. And the resulting victory was instrumental in shutting down a red wave in the House.

Summer Lee Shakes Things Up in Fracking Country

Despite millions of dollars weaponized against her and dirty tactics on her opponent’s behalf, Summer Lee has clinched a victory.

Lee will serve the 2nd-most gas-producing state in the country, smack dab in the middle of the fracking-plagued Marcellus Shale region. She was not only a strong progressive candidate in a battleground state — she was the only Democrat in her primary to call for a ban on fracking. 

We knew we had to show up for Summer Lee and work hard on her behalf. Over the past few months, Food & Water Action generated more than 112,000 phone calls and 3,000 handwritten letters getting out the vote for her. At the polls, we handed out “Summer Voter” stickers to anyone who texted friends reminding them to vote, resulting in 2,160 reminder texts.

Now, Representative-elect Lee will tackle environmental racism and support working families. She will crack down on corporate influence in politics. And she will fight for a Green New Deal and a 100% clean energy transition we need.

Maxwell Frost Becomes First Gen-Z Candidate in Congress

Our endorsed candidate Maxwell Alejandro Frost is headed for Capitol Hill. The first Gen Z Congressmember, Representative-elect Frost brings his experience as a national organizer against gun violence to Florida’s 10th district.

Along with Food & Water Action, Frost gathered endorsements from the Congressional Progressive Caucus, the AFL-CIO, Sen. Bernie Sanders (D-VT), Sen. Elizabeth Warren (D-MA), and a host of progressive organizations and lawmakers. His campaign has been a lesson in movement-building — not just mobilizing voters around a candidate, but around a shared vision for the future. 

That vision includes tackling climate change, defending working families and marginalized communities, and securing a future safe for all.

Jamaal Bowman Stays Fighting For New York

When it came to NY16’s progressive incumbent Jamaal Bowman, we knew what he is capable of. That’s why we endorsed him — again.

For example, last summer, in the midst of corporate price gouging and rising energy prices, Rep. Bowman introduced the Emergency Price Stabilization Act. When enacted, the bill will empower the White House to set prices in key sectors.

We need more bold legislation like this — not only to fight rising inflation and protect working families, but also to respond to the looming threat of climate chaos on our economy. With Rep. Bowman still in Congress, we’re heartened to know we’ve kept a fighter in our corner.

No Matter the Results, We’ll Keep Defending the Planet

We are proud of these victories and these candidates. The results so far have made clear: when candidates speak up and mobilize around bold, progressive policies, they win.

That’s true on the national stage and in state and local races, including ones we supported like Iowa’s State Senator Sarah Trone Garriott, who defeated the Republican Senate President, and New York Governor Kathy Hochul.

But as we wait for the midterms’ final tallies, we know that whatever the results, the fight continues. Every day, the planet becomes more unlivable and greedy corporations tighten their stranglehold on our economy. 

In the weeks to come, we’ll be breaking down the results and strategizing with allies. At the same time, we will double down on our fight against election deniers, corporate mouthpieces, and puppets for polluting industries. 

And our overarching goal remains the same: supporting candidates who will take the bold action we need to secure safe food, clean water, and a livable future for all.

We can’t do this work without you!

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This Grocery Merger Would Be Bad News for Prices and Families

Categories

FoodNews & Opinion

by Mia DiFelice

We have enough to worry about these days, from conflict abroad and at home, to climate-fueled natural disasters. Going to the grocery store has become yet another daily anxiety for more of us than ever, as prices rise higher and higher. 

But if a proposed merger between two grocery giants goes through, prices will rise even more. 

In October, media outlets began reporting merger negotiations between Kroger and Albertsons, two of our country’s largest grocery store chains. The deal would net Kroger a cool $24.6 billion, with big payouts to the Albertsons CEO and its private equity owner. Meanwhile, the resulting Kroger behemoth could wield its new power to squeeze working families and entire communities.

Grocery Stores Gobble Market Power Through Mergers

Already, a handful of corporations dominate the grocery sector. Currently, over two-thirds of grocery sales in the U.S. go to five corporations, and a Kroger-Albertsons merger would make that four.

These corporations hide their outsized power in the market from consumers by buying up subsidiaries with different names. While you can shop at a Ralph’s, a Food 4 Less, or a Smith’s Food and Drug, the profits funnel into the same company—Kroger.

In recent years, mergers and acquisitions have become more outrageous. But judges and the federal agencies charged with protecting consumers seem not to care. In the past decade, they gave a pass to some of the largest mergers in history. Now, food giants tower over those of the trust-busting era that gave rise to our consumer protection agencies in the first place. 

Grocery Monopolies Choose Profit Over People

The U.S. first began busting trusts, or monopolies, back in the early 1900s because it recognized how they harm the economy. Market power allows corporations to profit at the expense of smaller companies, consumers, and regional economies. 

For instance, when grocery corporations grow, they often become the biggest or only buyer in a region. Grocery giants can name the price they pay for goods, ripping off farmers and manufacturers, who must accept whatever they can get to stay afloat.

On the other side of the grocery aisle, these giants can raise prices for shoppers with impunity. Last summer, Kroger’s CEO Rodney McMullen even bragged about hiding behind inflation to raise food prices and boost profits.

At the same time, superstores like Kroger and Walmart beat out smaller, local businesses by lowering prices on key items. These small stores, unable to compete, are forced to shutter.

However, the low prices don’t stick around. In fact, the Federal Trade Commission found that growing market concentration actually leads to higher prices. But by then, consumers have no other choice but to shop at the superstores.

The arrival of such a superstore can have other ripple effects throughout a region. It can lower wages by introducing its own rock-bottom pay schedules to the local labor market. And by shuttering competitors, it can reduce food access to just a single superstore. This especially impacts access for low-income city residents, who are less likely to own cars, as well as far-flung rural communities. 

Not Just Groceries — Monopolies Threaten Our Whole Food System

The Kroger-Albertsons merger is only the latest in a long string of threats to consumers throughout our food system. For instance, during the pandemic, meat corporations boosted retail prices while paying farmers less. One meat corporation even lied to the public about meat supplies to keep workers in plants — and money coming in — during the worst of the pandemic. 

While clerks and meatpackers risked death by COVID in their workplaces, many corporations limited hazard pay. Instead of keeping workers safe or compensating them fairly, they invested in stock buybacks to generate more cash for shareholders.

Meanwhile, food manufacturers have also consolidated. When it comes to the products we buy at the store, companies like Kraft-Heinz (the two merged in 2015), General Mills, and Campbell soup dominate multiple food categories like soft drinks, yogurt, and baby food.

And market power goes all the way to farm. A few corporations have taken over seeds, fertilizers, tractors, and more. At every step in our food system, from factory farm, to factory floor, to our kitchen tables, a handful of companies make the rules. 

This not only affects the prices at the grocery store, but conditions for workers, the quality of our food, and the sustainability of our climate.

We Can Stop the Advance of Grocery Prices and Market Power 

Even though the grocery giants always say mergers will help them lower prices for consumers, we know the one recently proposed will only hurt us. 

Not only must the Federal Trade Commission reject the Kroger-Albertsons merger — we need to stop corporate greed and consolidation throughout our food system.

To this end, Democratic lawmakers chave proposed vital legislation, like the Food and Agribusiness Merger Moratorium Act and the Farm System Reform Act. They are working to reform our antitrust framework and re-envision our food system as one that works for everyone, not just corporations. To continue this work, they need to hold onto their majority in Congress.

In the run-up to the midterms, Food & Water Action is working tirelessly to mobilize voters and secure the strong turnout we need. This November, there’s a clear way to fight inflation and lower prices at the grocery store. Let’s elect leaders who will stand up to corporate giants and their relentless pursuit of profit.

Help us get out the vote! Reach out to three friends or family members and ask them to head to the polls. 

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In These Midterms, Vote For Cracking Down on Wall Street Greed

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DemocracyNews & Opinion

by Mia DiFelice

We all remember how the 2008 financial crisis devastated workers and families. Homes were foreclosed, jobs evaporated, small businesses shuttered. Essentials like gasoline and food grew unaffordable for millions. 

Back then, we knew exactly who to blame: Wall Street titans, who gambled our economic future on short-term get-rich-quick schemes. But in the aftermath of that crisis, Wall Street walked away with a slap on the wrist and hundreds of billions of taxpayer dollars. In fact, markets have become less regulated since.

Now, in the midst of multiple crises at home and abroad, Wall Street speculators are diving into the chaos to make a quick buck. And once again, workers and families are bearing the brunt of their bets, in the form of higher prices. 

Wall Street Speculation Raises The Cost of Living

The U.S. stock market is full of trading on commodities like copper, oil, grain, and other raw goods. Farmers and producers use financial tools like futures contracts to sell commodities to buyers. These contracts help producers and buyers to lock in stable prices in volatile markets.

But markets for commodities trading have become destinations for speculators, who trade for profit only, not for the commodities themselves. They now outnumber real producers and consumers in commodities markets.

Speculators buy and sell contracts that essentially bet on changes in the markets. For example, one could buy a contract that pegs next week’s oil price at $100 a barrel. The more the price rises over $100, the more the speculator profits off the contract. 

But this creates perverse incentives. The more wildly commodity prices swing, the more money speculators can make. 

Recently, speculation has fanned the flames of rising grocery and gasoline prices. For instance, in the oil market, Wall Street’s bets on oil far outnumber any real, physical trades on it. Speculators trade about 13 times the amount of oil that actually changes hands in real life.

Speculation’s growth massively affects prices. One economist estimates that in oil markets, speculation intensifies price changes rooted in market fundamentals (for example, supply and demand) ten-fold. It’s no coincidence that at a time of frenzied speculation, global food prices shot up 84% in two years and oil prices shot up 55% in just five months.

Wall Street Makes Billions Off Everyone Else’s Struggles

Under-regulated commodity trading has allowed a flurry of activity in the wake of recent global crises, which had already volatile markets swinging wildly. In early 2022, speculation on the rising prices of grains and oilseeds hit highs last seen in 2012. In January of this year, prices for fracked gas futures skyrocketed 46% in one day, the highest single-day gain on record. 

The sharks of Wall Street had descended on the blood in the water.

As the invasion of Ukraine heightened energy anxieties, commodity traders pulled in record returns and commodity-trading hedge funds got their own boost. Meanwhile, banks trading commodities on Wall Street were propelled toward record profits — projected to total $18 billion by the end of the year.

Commodity trading is so lucrative that some of the biggest traders in commodity markets are corporations wrapped up in the commodities themselves. That includes meat and agricultural behemoth Cargill, oil refining and petrochemical giant Koch Industries, and many more megacorporations cashing in on today’s crises. Oil corporation Shell earns on average $4 billion a year from their trade activity.

Meanwhile, working families can barely get by.

We Can and Must Rein in Wall Street

Our recent gas and grocery prices have made it clearer than ever—the U.S. must do more to defend our economy and our families from Wall Street’s manipulation. 

Following the 2008 financial crisis, the federal government cracked down on speculators — but it wasn’t nearly enough. In particular, the biggest trading firms successfully lobbied against position limits (limits on the number of contracts held by a single trader and class of traders). In 2020, the Trump administration punted a new position limits rule.

Elected officials in office must take the threat of speculation seriously — and Democrats are doing just that. After years of deregulation, accelerated by the previous administration, Democrats plan to hold Wall Street accountable.

Rep. Ro Khanna (D-CA), a member of the subcommittee that oversees the Commodity Futures Trading Commission, has made clear his worries about the role of speculation in our food and oil prices. Now, Sens. Elizabeth Warren (D-MA) and Cory Booker (D-NJ) have asked CFTC Chair Rostin Behnam to investigate the role of commodity markets in today’s inflationary prices. 

We can only continue this progress with more and better Democrats in office.

You can help us fight corporate speculation by getting out the vote. Chat with three friends about heading to the polls!

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