Calls Meeting with Federal Regulator ‘Very Disappointing'
WASHINGTON, May 26 - With the summer vacation season beginning this Memorial Day weekend as gas prices hover near $4 a gallon, Sen. Bernie Sanders (I-Vt.) Thursday pressed the top federal commodities regulator to enforce a law that would stop speculators from artificially driving up oil prices.
A member of the Senate energy committee, Sanders hosted a meeting in his Capitol Hill office with Gary Gensler, the Commodity Futures Trading Commission chairman.
"The American people are hurting, especially in rural states like Vermont. We need action and we need it now," Sanders said. "Unfortunately I was very disappointed in the tone of the meeting and the lack of urgency."
The Wall Street reform law enacted last year required the commission to restrict the amount of oil that speculators could trade in the energy futures market. The law called for new regulations to kick in by January. "I want to know why they haven't done it," Sanders said. "In other words, the chief regulator on oil speculation, in my view, is breaking the law."
Also at the meeting were Sens. Maria Cantwell (D-Wash.), Bill Nelson (D-Fla.), Jeff Merkley (D-Ore.), Amy Klobuchar (D-Minn.), Mark Udall (D-Colo.) and Ron Wyden (D-Ore.).
The national average price for regular gasoline is $3.82 a gallon. In Vermont, the price tops $3.90 a gallon. Meanwhile, the supply of crude oil is higher than it was two years ago and the demand for gasoline is lower than two years ago, when a gallon of gas cost only $2.30. "There is mounting evidence that the sky-high price of gas has nothing to do with the fundamentals of supply and demand and everything to do with Wall Street speculators jacking up oil and gas prices in the energy futures market," Sanders said.
The CEO of Exxon Mobil, Rex Tillerson, recently testified before Congress that Wall Street speculators are driving up the price of oil as much as 40 percent. Goldman Sachs has said that at least 20 percent of the price of oil comes from excessive speculation. That translates into about 70 cents a gallon at the pump.
The commission recently filed civil lawsuits against Parnon Energy, Arcadia Petroleum, and Arcadia Energy for manipulating the crude oil market more than over three years ago and causing gas prices to rise by as much as 50 cents a gallon between January and April of 2008. The commission has taken other actions in recent years. In 2010, the commission fined ConAgra $12 million for artificially driving up crude oil prices to $100 back in January of 2008. In 2000 and 2001, the CFTC fined Enron $35 million for manipulating the electricity markets on the West Coast and driving up prices by 300 percent. In 2004, the CFTC fined BP $303 million for artificially increasing propane prices by 40 percent in one month. In 2006, federal regulators found that the Amaranth Hedge Fund was responsible for artificially driving up natural gas prices by controlling as much as 75 percent of all of the natural gas futures contracts in a single month.
"Today," Sanders said, "the CFTC is breaking the law by not cracking down on Wall Street speculators. The Wall Street reform act required the commission to impose strict limits on the amount of oil that Wall Street speculators could trade in the energy futures market no later than January 17 of this year. Four months later, the CFTC still has not imposed those speculation limits."