SHAHEEN: EXCESSIVE SPECULATION IN THE ENERGY MARKETS MUST STOP

Calls on President’s Administration to act quickly on enforcement while welcoming new plans

April 17, 2012

(Washington, D.C.) –U.S. Senator Jeanne Shaheen (D-NH) today urged the Obama Administration to move faster on enforcing measures Congress passed to curb runaway oil speculation and lower gas prices, while she welcomed the President’s announcement of new plans to increase oversight of oil markets. 

Shaheen today again urged the Commodity Futures Trading Commission (CFTC) to implement limits on speculation written into the 2010 Wall Street Reform Act. The CFTC has missed the deadline for implementing those limits by over a year. 

Her letter to the CFTC comes just as President Obama announced new plans today to strengthen oversight of energy markets and hold accountable traders who manipulate markets for financial gain at the expense of consumers.

“Excessive oil speculation distorts the supply and demand forces that should be governing the price of oil,” Shaheen said. “This unregulated speculation does nothing to help our economy. It just raises the price of oil and gas, hurts our small businesses and our families, and benefits a select few traders on Wall Street. I am pleased that the President announced plans today to increase oversight of oil markets, and I hope that the CFTC will now move quickly to implement long overdue rules curbing speculation.” 

While the supply of oil in the United States has increased significantly in recent years, the current average price of gas is almost two times higher than it was three years ago.  According to a Goldman Sachs study last year, excessive oil speculation on Wall Street artificially adds about $23 to the price of every barrel of oil. That means that as much as 56 cents per gallon of gas go straight to Wall Street speculators who have no intention of ever using the oil they’re trading.  The Consumer Federation of America said speculation cost the average household $600 last year.

Shaheen has worked to curb excessive speculation during her time in the Senate.  Last week she joined other Senators in submitting an amicus curiae legal brief in opposition to a Wall Street lawsuit aimed at stopping the CFTC from limiting speculation.

In January and March of last year, Shaheen wrote to the CFTC urging them to act quickly to set limits on speculation in energy markets.

The text of today's letter from Shaheen to the CFTC is below.


April 17, 2012

The Honorable Gary Gensler
Chairman
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW, Room 9060
Washington, DC 20581-0001

Dear Chairman Gensler and Commissioners Sommers, Chilton, O’Malia and Wetjen:

I write to urge you, once again, to fulfill your responsibility to prevent excessive speculation in the energy markets.  It has been over a year since the Commodity Futures Trading Commission missed the deadline set by Congress to establish hard speculative position limits for commodities such as crude oil, gasoline, and home heating oil.  The Commission must exercise this authority in order to restore order to energy markets and lower unnecessarily high prices for gasoline and home heating oil.

While the supply of oil in the United States has increased significantly in recent years, the current average price of gas is almost two times higher than it was three years ago.  It is clear that market fundamentals do not explain the current price of oil.  Goldman Sachs reported last year that speculation contributes $23 to the price of a barrel of oil, which means that American families are paying an extra 56 cents for each gallon of gas at the pump.

For American consumers already struggling to make ends meet, high gas prices are becoming an ironclad restriction on purchasing power.  In addition, high energy prices mean lower margins for many small businesses.  The Commission has the ability to relieve some of this pressure on American families and small businesses by moving quickly to address excessive speculation.

The Commission must act decisively to help address out of control energy prices and provide some measure of confidence in today’s energy markets.

Sincerely,

Jeanne Shaheen
United States Senator

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