Senator Blumenthal Calls For Crackdown On Excessive Oil Speculation
(Washington DC) - Today, Senator Richard Blumenthal (D-CT) spoke on the floor of the Senate calling for action against abuses and speculation that inflate gas prices.
Last week Blumenthal wrote U.S. Attorney General Eric Holder asking that he investigate and prosecute excessive speculation and fraud in energy markets that contribute to recent spikes in oil prices.
A full transcript of the floor speech is below:
Yesterday the average price of gasoline in Connecticut topped $4 a gallon, the fifth-highest average price in the country. Across the nation, prices are fast approaching that amount for every American. The rising cost of gasoline is a real harsh and unacceptable fact of life for ordinary Americans. It is crushing to the average consumer, it is stifling economic growth, it is hurting our businesses for people the country, ordinary Americans, our middle class. These dramatic increases are not a luxury.
They are more than an inconvenience; they threaten their ability to go to work, to do their work, and it drives up the prices of goods for all kinds of commodities, not just gasoline. It threatens to derail our price of a gallon of gasoline. No question. It is complex. There is a growing consensus among energy analysts that part of the reason -- a large part of the reason has to do with speculation.
Now, I'm mindful of the fact that there are a lot of experts and a lot of debate on different sides of this issue, but there is a powerful and growing consensus that speculation is a major cause of the rising cost of gasoline. In fact, there's a list of businesses, government organizations, and trade associations who have undertaken their own studies and investigations of the oil futures market. Let me list them for you. Exxon Mobil, the Petroleum Marketers Association of America, Goldman Sachs, the American Trucking Association, the Consumer Federation of America, Delta Airline, The International Monetary Fund, the St. Louis Federal Reserve -- what do they all have in common? They have all indicated that excessive oil speculation significantly increases oil and gasoline prices.
In fact, according to a recent article in Forbes that's based on a report from Goldman Sachs, excessive oil speculation "translates out into a freedom for gasoline at the pump of 56 cents a gallon." the chairman of the Commodities Futures Trading Corporation has stated publicly that Wall Street speculators now control more than 80 percent -- in fact as much as 85 percent -- of the energy futures market, a figure that has more than doubled over the last decade. In short, people are buying contracts for future delivery of oil or gasoline that have no intention of ever taking delivery. Something is not working in the markets. Demand has dropped. Consumption has been reduced. Supply is at least at the level it was last year, and yet prices are rising.
The excessive oil and gasoline speculation is clearly causing market disturbances that prevent the market from accurately reflecting the forces of supply and demand. And it is vital that government use every available resource to protect Americans from markets that are not working, from price gouging or price-fixing or illegal manipulation. The causes of the market disruption must be confronted. Last April the U.S. Attorney General announced the formation of a Financial Fraud Enforcement Task Force Working Group. I'll repeat that. Financial Fraud Enforcement Task Force Working Group that was specifically empowered to combat illegality in these markets.
I wrote to the Attorney General last may in the wake of the appointment of that Task Force, telling him respectfully that -- quote -- "announcing investigations and beginning to issue subpoenas could curb some of the worst speculated activity that may well be under way at this very moment." I believe now that this Task Force has the authority, it has the mandate, it has the responsibility and the obligation to be effective. We've heard virtually nothing about it over this last year.
We have heard of no investigation, no action, certainly no prosecution. And now is the time that it should be active, and that is the reason that I have written to the Attorney General, and I ask that the letter be made part of the record. Seeking from him that this Task Force be proactive and effective by beginning investigations and taking whatever action is necessary to combat illegality in these markets.
I believe that the Attorney General of the United States, if he makes vigorous and effective use of his Task Force, broad regulatory authorities to send a significant signal to authorities that manipulation in the future oils market will not be tolerated. These gasoline prices are on the minds of Americans across the country. They have economic effects, but they also have affected consumer confidence on the lifeblood of economic recovery, even more than the share of dollars that go to pay for gasoline at the pump. There is an effect on consumer confidence.
This obligation on the part of our law enforcement is one that goes to the core of their credibility. It demands that the Attorney General of the United States take this action to reenergize and revive the Task Force, and I am hopeful, knowing of his reputation, that he will act accordingly to assure all of us that illegality, whether it's price-fixing or price gouging or cornering the market will not be tolerate and that effective action will be taken against it. Thank you, Mr. President.
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