SHAHEEN, SENATORS PUSH TO REIGN IN EXCESSIVE SPECULATION IN OIL, GAS MARKETS
Shaheen: Speculation hurts consumers, economy
(Washington, DC-) – Citing the negative impact that excessive Wall Street speculation has had on fuel prices for consumers, U.S. Senator Jeanne Shaheen (D-NH) yesterday urged the Commodity Futures Trading Commission (CFTC) to crack down speculation in commodities markets. The call comes as the comment period on the long-overdue CFTC rules aimed at curbing excessive speculation recently came to an end. Shaheen was joined by U.S. Senators Carl Levin (D-MI), Bernie Sanders (I-VT), Dianne Feinstein (D-CA), Ben Cardin (D-MD), Jeff Merkley (D-OR), Bill Nelson (D-FL) and Al Franken (D-MN).
“Higher prices for fuel caused by excessive speculation continues to hurt consumers and small businesses,” Shaheen said. “These practices are driving up the price of fuel and other goods, putting a drag on our economy at a time when the American people can least afford it. I hope that the CFTC will act quickly to reign in speculation and restore order to the markets.”
In the letter, the Senators noted that in 2010 it was estimated that speculation contributed $23 to every barrel of oil which increased the price of a gallon of gas by an extra 56 cents. Shaheen has been vocal about the negative impact of speculation and the need to end the practice. In 2011, Shaheen specifically called on the CFTC to establish rules to limit speculation in commodities markets.
The full text of the letter is included below:
March 13, 2014
The Honorable Mark Wetjen
Acting Chairman
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street NW, Room 9060
Washington, DC 20581-0001
The Honorable Scott O’Malia
Commissioner
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street NW, Room 9060
Washington, DC 20581-0001
The Honorable Bart Chilton
Commissioner
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street NW, Room 9060
Washington, DC 20581-0001
Dear Chairman Wetjen and Commissioners Chilton and O’Malia,
For too long, American businesses and consumers have suffered as a result of excessive speculation in commodities markets, especially for critical products such as gasoline, home heating oil, propane, and natural gas. As you know, Congress tasked the Commodity Futures Trading Commission (CFTC) to prevent excessive speculation in these commodities markets by establishing hard position limits. Unfortunately, the speculation rule has been held up over the last several years, which has allowed speculators to continue driving up the price or increasing the price volatility of these important commodities. Now that the comment period on the rule has come to a close, we write today to ask that you swiftly exercise your authority and restore order to energy and other commodity markets.
While the supply of oil in the United States has increased significantly in recent years, the current average price of gasoline is almost two times higher than it was five years ago. It is clear that market fundamentals do not explain the current price of oil. In 2010, Goldman Sachs reported 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, higher gasoline and other energy prices have become a serious restriction on purchasing power. In addition, high energy prices result in lower margins for small businesses. In some regions, recent price increases in the natural gas market have been particularly challenging for businesses that rely on natural gas for power generation, putting pressure on their ability to maintain their operations through a cold winter season.
The Commission’s newly proposed rules to curb excessive speculation through position limits on commodity speculators is an important step toward relieving this pressure and preserving jobs for American families and small businesses. We urge the Commission to act quickly and decisively to approve a final rule to help address volatile energy prices that fail to reflect market supply and demand, and restore public confidence in today’s energy markets.
Sincerely,
Jeanne Shaheen Carl Levin
United States Senator United States Senator
Bernie Sanders Dianne Feinstein
United States Senator United States Senator
Ben Cardin Jeff Merkley
United States Senator United States Senator
Bill Nelson Al Franken
United States Senator United States Senator
