Economists at the Federal Reserve Bank of St. Louis estimate that Wall Street speculation is now the second-largest contributor to oil prices, accounting for 15% of the increase in oil prices over the last decade – correlating strongly with the expansion of commodity trading and speculation in oil futures. This makes speculation perhaps the most fertile ground for actually reducing gas prices, says Zach Carter:

While politicians have little ability to alter the price swings of commodities like oil, regulators have both the authority and policy tools to do so. The Commodity Futures Trading Commission is responsible for overseeing the financial market for oil. The 2010 Wall Street reform bill gave the CFTC new power to limit excessive speculation, but the rule will not go into effect until later this year.

Commodity indexes allow speculators to bet on the price of several commodities at once, and have become very popular investment tools for both Wall Street investment companies and pension funds. Between 2004 and 2008, the total volume of trading activity in commodity indexes jumped from $13 billion to about $260 billion, according to research by Michael Masters, founder of Masters Capital Markets and the financial reform nonprofit Better Markets.

Unfortunately, lawmakers with a keen interest in stopping oil speculation have judged that the CFTC position limit rule is not strong enough. So if you’re looking for a place for the executive branch to actually have an impact on reducing the price of oil, a stronger and more timely anti-speculation rule would be the place to start, and this is now backed by Federal Reserve research.

So what does the Administration actually plan to do to lower gas prices? Why, cutting regulations and building old-energy infrastructure, of course. There has been no formal announcement, but it is likely that new rules on smog will be delayed out of concern that they will increase gas prices.

The Obama administration, facing political heat over high gasoline prices, may delay new rules that would cut pollution from cars but also could bring higher prices at the pump, environmental and industry leaders said.

The rules would require refiners to make cleaner-burning gasoline and auto makers to build cars that emit fewer smog-forming pollutants. The Environmental Protection Agency was scheduled to roll out the rules before April, but it hasn’t yet submitted them for White House review.

“We expect that timing will begin to slip, perhaps for political considerations” said American Petroleum Institute President Jack Gerard.

This is of a piece with the new directive from regulations czar Cass Sunstein on accounting for the “cumulative” cost of regulations. This is an old pro-business tactic that focuses on the costs of regulations without any consideration of benefits, leading to a skewed view. That perspective is reflected in the potential delay of smog rules, which would reduce pollution and significantly improve public health.

(By the way, liberals, it’s not worth bragging that the number of regulations have gone down under President Obama. Unless you believe that the nation under the Bush Administration featured the oppressive hand of government regulating everything in our lives.)

Furthermore, the President plans to travel to Cushing, Oklahoma, which if you believe primary results he may be less-liked than anywhere in the country, to personally announce a fast-tracking of the southern half of the Keystone XL pipeline.

President Barack Obama plans to announce in Cushing, Oklahoma, on Thursday that his administration will expedite the permit for the southern half of the Keystone XL pipeline, a source familiar with the president’s announcement told CNN [...]

Late last month, TransCanada, the company behind the Keystone XL Pipeline, announced it would move forward with the process to build the southern half of the pipeline, which would begin in Cushing – the president’s third stop on his two-day energy tour. The White House praised the move.

Senior administration officials would not confirm the president’s plan to unveil the effort to cut red tape for the project, though one senior administration official acknowledged the need to deal with the glut of oil in Cushing, where oil from the Midwest hits a bottleneck as it is transported to the Gulf of Mexico.

The Midwest glut of oil caused by the Cushing bottleneck, incidentally, has kept prices artificially low for gas in the Midwest, and alleviating that glut will actually increase those prices, as the oil pushes out to the world market. [For affected Americans, the relatively small decrease in global prices from increased supply will not balance out the increase in price of that oil for the Midwest; just think about the impact of the same amount of oil on a narrow belt of one country versus the entire world.] So this is a plan that will raise gas prices in the Midwest,  a hotly contested area in the fall elections.

This will not help bring additional tar sands to market, as the Cushing to Texas pipeline doesn’t include the upper part of the Keystone XL project that connects to Canada. But it does continue the build-out of old energy infrastructure at a time when new energy solutions are needed. The solution to reducing gas prices in relative terms are available to the executive branch, but they’re taking a different approach.