Senate Bill Would Force Emergency Action to Cut Gas Prices

U.S. Senator Bernie Sanders

March 21, 2012

WASHINGTON, March 21 - A group of senators today introduced a bill to make federal regulators invoke emergency powers to rein in speculators responsible for rapidly-rising gasoline prices.

The legislation would set a 14-day deadline for the Commodity Futures Trading Commission to implement rules to stop excessive speculation by Wall Street traders in oil futures markets. The bill by Sen. Bernie Sanders (I-Vt.) is cosponsored by Sens. Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Ben Cardin (D-Md.), Al Franken (D-Minn.), Amy Klobuchar (D-Minn.) and Bill Nelson (D-Fla.).

The measure was prompted by gasoline prices that are nearing $4 a gallon and the commission's refusal to obey a Wall Street reform law that required trading limits to be in place by Jan. 17, 2011.

"Millions of American consumers are hurting as a result of excessive speculation on the oil futures market and the future of our economy hangs in the balance. The time to act is now," Sanders said at a news conference in the Capitol.

"Oil supply is up and demand is down so there is no logical reason why gas prices continue to soar," added Cardin. "We need to take decisive action now to stop the speculators who are driving up prices for all of us at a time we can least afford it."

"The CFTC has the power to stop this excessive speculation, but has been dragging its feet. This legislation would direct the CFTC to take immediate action to reduce unnecessary speculation and give families some relief at the pump," Klobuchar said.

"To combat excessive gas prices we need a crackdown on out-of-control speculation and gambling in oil markets," Blumenthal said. "This agency-- inactive for too long-- must be compelled to act, stopping manipulation and abuses that cost consumers and endanger our fragile economic recovery. "

"In Minnesota gas prices are averaging nearly $3.74 a gallon for regular and there's plenty of agreement that speculators are driving up the price-accounting for about 56 cents extra per gallon," said Sen. Franken. "The Commodities Futures Trading Commission needs to stop dragging its feet and set position limits on speculators like it was mandated to do in the Wall Street Reform law. The legislation we are introducing today would force the Commission to take action which would help Minnesotans at the pump. It's the right thing to do."

The recent surge in crude oil prices is widely attributed to speculators who control more than 80 percent of the energy futures market, a figure that has more than doubled over the past decade.

Higher oil prices have in turn pushed up the price of gasoline, which stood at a national average of $3.84 per gallon on Tuesday. Supplies are greater today than three years ago, when the national average price for a gallon of gasoline was just $1.94. The demand for oil in the U.S. is lower today than it was in April of 1997.

There is broad consensus that speculators are to blame. Exxon Mobil, the American Trucking Association, Delta Airlines, the Petroleum Marketers Association of America and the Federal Reserve Bank of St. Louis all say excessive oil speculation significantly increases oil and gasoline prices. Citing a recent report from the investment bank Goldman Sachs, a Feb. 27, 2012, article in Forbes said excessive oil speculation adds $.56 to the price of a gallon of gas.

The legislation calling for emergency action is identical to bipartisan legislation that overwhelmingly passed the House of Representatives by a vote of 402-19 during a similar crisis in 2008.

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JG: The XXI Century Hamlet that we currently have in the White House's Oval Office seems paralyzed with fears that the greedy Wall Street capitalist oil speculators may order his assassination.

His soliloquy: "To attack or not to attack Iran with my mercenary Zionists? That is the question!"

U.S. Senator Bernie Sanders: Wall Street greed fueling high gas prices

Wall Street speculation drives up the cost of oil and gas;
Goldman Sachs experts say it pushes prices up by 40%.
By Bernie Sanders, Special to CNN
February 28, 2012 -- Updated 1805 GMT (0205 HKT)>

Editor's note: Bernie Sanders is an independent senator from Vermont. He was elected to the U.S. Senate in 2006 after serving 16 years in the House of Representatives and is the longest-serving independent member of Congress in American history.

(CNN) -- Gas prices approaching $4 a gallon on average are causing severe economic pain for millions of Americans. Pump prices spiked 5% in the past month alone. Crude oil prices stood at $108 on Friday, up from only double digits at the beginning of the month.

What's the cause? Forget what you may have read about the laws of supply and demand. Oil and gas prices have almost nothing to do with economic fundamentals. According to the Energy Information Administration, the supply of oil and gasoline is higher today than it was three years ago, when the national average for a gallon of gasoline was just $1.90. Meanwhile, the demand for oil in the U.S. is at its lowest level since April of 1997.

Is Big Oil to blame? Sure. Partly. Big oil companies have been gouging consumers for years. They have made almost $1 trillion in profits over the past decade, in part thanks to ridiculous federal subsidies and tax loopholes. I have proposed legislation to end those pointless giveaways to some of the biggest and most profitable corporations in the history of the world.

But there's another reason for the wild rise in gas prices. The culprit is Wall Street. Speculators are raking in profits by gambling in the loosely regulated commodity markets for gas and oil.

A decade ago, speculators controlled only about 30% of the oil futures market. Today, Wall Street speculators control nearly 80% of this market. Many of those people buying and selling oil in the commodity markets will never use a drop of this oil. They are not airlines or trucking companies who will use the fuel in the future. The only function of the speculators in this process is to make as much money as they can, as quickly as they can.

I've seen the raw documents that prove the role of speculators. Commodity Futures Trading Commission records showed that in the summer of 2008, when gas prices spiked to more than $4 a gallon, speculators overwhelmingly controlled the crude oil futures market. The commission, which supposedly represents the interests of the American people, had kept the information hidden from the public for nearly three years. That alone is an outrage. The American people had a right to know exactly who caused gas prices to skyrocket in 2008 and who is causing them to spike today.

Even those inside the oil industry have admitted that speculation is driving up the price of gasoline. The CEO of Exxon-Mobil, Rex Tillerson, told a Senate hearing last year that speculation was driving up the price of a barrel of oil by as much as 40%. The general counsel of Delta Airlines, Ben Hirst, and the experts at Goldman Sachs also said excessive speculation is causing oil prices to spike by up to 40%. Even Saudi Arabia, the largest exporter of oil in the world, told the Bush administration back in 2008, during the last major spike in oil prices, that speculation was responsible for about $40 of a barrel of oil.

Just last week, Commissioner Bart Chilton, one of the only Commodity Futures Trading Commission members looking out for consumers, calculated how much extra drivers are being charged as a result of Wall Street speculation. If you drive a relatively fuel-efficient vehicle such as a Honda Civic, you pay an extra $7.30 every time you fill your tank. For larger vehicles, such as a Ford F150, drivers pay an extra $14.56 for each fill-up. That works out to more than $750 a year going directly from your wallet or pocketbook to the Wall Street speculators.

So as speculators gamble, millions of Americans are paying what amounts to a "speculators tax" to feed Wall Street's greed. People who live in rural areas like my home state of Vermont are hit harder than most because they buy gas to drive long distances to their jobs.

It doesn't have to work this way. The current spike in oil and gasoline prices was avoidable. Under the Wall Street reform act that Congress passed in 2010, the Commodity Futures Trading Commission was ordered to impose strict limits on the amount of oil that Wall Street speculators could trade in the energy futures market. The regulators dragged their feet.

Finally, after months and months of law-breaking delays, the commission in October adopted a rule. It was a weak version of a proposal that might have put meaningful limits on the number of futures and swaps contracts a single trader could hold. Even the watered-down regulation adopted by the industry-friendly commission was challenged in court. The Financial Markets Association and the International Swaps and Derivatives Association wanted free rein to continue unregulated gambling in the oil markets.

So today, Wall Street once again is laughing all the way to the bank. Once again, federal regulators should move aggressively to end excessive oil speculation. We must do everything we can to lower gas prices so that they reflect the fundamentals of supply and demand and bring needed relief to the American people.

The time for real action is now.