WASHINGTON, June 15 - Sen. Bernie Sanders (I-Vt.) today introducedlegislation to make federal commodity regulators halt excessive oil speculation that has driven up gasoline prices.
A provision in last year's Wall Street reform law required federal regulators to clamp down on speculators, but the Commodity Futures Trading Commission has refused to do so. Partly as a result of the failure to enforce the law, the national average price for a gallon of gasoline today is $3.69 a gallon, although supplies are greater and demand lower than two years ago when prices averaged about $2.44 a gallon.
"We have a responsibility to 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," Sanders said.
When speculators push up oil prices "guess who suffers, it's the rest of us," said Sen. Bill Nelson (D-Fla.), an original cosponsor of the bill who joined Sanders at a Capitol press conference. Sen. Richard Blumenthal (D-Conn.), another cosponsor, called gas prices "absolutely crushing" for American families and the economy. Other cosponsors include Sens. Jeff Merkley (D-Ore.), Al Franken (D-Minn.), and Sheldon Whitehouse (D-R.I.).
Rep. Maurice Hinchey (D-N.Y.) plans to introduce a companion measure in the House. His cosponsors include Reps. Peter Welch (D-Vt.) and Peter DeFazio (D-Ore.). "Once again, the economic well-being of middle-class families is being put at risk by Wall Street," said Hinchey. "The price of gasoline has spiked up due to record speculation, and small businesses and working people are paying the price. This legislation would immediately implement new rules to ensure the price of fuel is based on supply and demand - not the whims of greedy speculators." Added Welch, "Speculation is driving up gas prices, causing hardship for Vermonters and threatening the economic recovery. With consumers paying a speculative premium of 60 to 70 cents a gallon, we need to shut down casino-style gambling in the markets."
The bills would force the chairman of the commission that regulates commodity markets to establish strong position limits to eliminate excessive oil speculation. It also would impose margin requirements so investors would have to back their bets with real capital. In addition, the measure would classify as speculators bank holding companies, investment banks or hedge funds that engage in proprietary oil trading. The commission chairman would be given broad power to take any other actions needed to ensure that the price of crude oil, gasoline, diesel fuel, jet fuel, and heating oil accurately reflects the fundamentals of supply and demand.
"Speculators are siphoning cash from gasoline consumers' pockets. Sen. Sanders' bill would crack down on speculators' now-legal rip-offs against consumers," said Robert Weissman, president of the consumers group Public Citizen.
Michael Trunzo, president and CEO of the New England Fuel Institute, said the bill would finally require federal regulators to enforce "one of the most important consumer protections included in last year's new Wall Street reform law."
Also participating in the press conference were Sean Cota, president and co-owner of Cota & Cota Oil, and Professor Michael Greenberger of the University of Maryland School of Law.
Energy experts from Exxon Mobil, Delta Airlines, and Goldman Sachs recently said that excessive speculation is responsible for 20 percent to 40 percent of the price of a barrel of crude oil.
Limits on speculation already should have been in place. Sanders has accused regulators of violating a provision in last year's Wall Street reform law that required regulators to impose new limits on speculators by Jan. 17. Now, five months after the deadline, the commission still is flouting the law and the American people are paying the price. Gasoline prices have gone up by about 60 cents a gallon since January.