WASHINGTON, D.C. – During an Energy and Natural Resources Subcommittee hearing held today on the role of excessive speculation on oil market volatility, U.S. Senator Maria Cantwell (D-WA) called on Congress to pass legislation this month that improves the way markets function and ensures markets work on behalf of consumers; not against them. Cantwell pointed to various independent reports that found that recent oil price swings in the oil markets are directly related to lax federal oversight.  Perilous Wall Street conditions further underscore Cantwell’s concerns that the federal government and the Commodities Futures Trading Commission (CFTC) are not doing everything they can to police the financial and oil markets to prevent speculators from driving up oil commodity prices. 

 

Several witnesses provided independent verification that volatile oil prices cannot be explained by supply and demand fundamentals, but that Congress must act to address the lax federal oversight and out of control financial markets that are resulting the most extreme price volatility in oil that we have ever seen.

 

“The bottom line is that we have an Administration and a CFTC that is watching out more for the rogue traders on Wall Street than American families living on Main Street,” said Cantwell. “It is up to Congress to make sure we are going to pass legislation that puts transparency and tough rules in place to make sure the markets work for consumers.  And we must make sure that market fundamentals, and not greed, are truly at work.”

 

Compared to 2007, Americans have paid $76 billion more for gas and $209 billion more for oil.  Various independent reports have shown that the fluctuations in price from 2007 to July 2008 cannot be explained solely by supply and demand forces.

 

Over the past few months, these reports have shown that speculators drove oil prices to record levels this past summer, and then changed their positions starting on July 15, causing prices to decline; that the dramatic rise in oil prices in June, and subsequent fall in price in July, can’t be explained by any of the fundamentals of supply and demand; that new data tools are needed so that federal agencies can stop market gyrations; and, that a weak dollar was also not the cause for these price hikes. 

 

Cantwell has repeatedly called on federal agencies, including the Federal Trade Commission and the Commodities Futures Trading Commission, to use their existing authority to conduct oversight over the oil and gas markets.  In April, she called on the Department of Justice to create an Oil and Gas Market Fraud Task Force to examine fraud and manipulation of oil and gas markets.  Earlier that month, Cantwell chaired a landmark Senate Commerce Committee hearing which served to highlight many of the oil futures market loopholes. 

 

On June 23, Cantwell introduced the Prevent Unfair Manipulation of Prices (PUMP) Act which takes a comprehensive approach to address the loopholes that allow energy traders to evade federal oversight.  And on July 11, Cantwell joined Senators Joseph Lieberman (I-CT) and Susan Collins (R-ME) in introducing the Commodity Speculation Reform Act to add transparency and aggregate speculation limits to futures markets and close the door to excessive speculation by tightening key investment laws and clarifying the oversight mission of the Commodities Futures Trading Commission (CFTC).

 

Cantwell continues to place a hold on the nominations of CFTC Commissioners Lukken, O’Malia, and Chilton.

 

# # #