WASHINGTON, DC – On Thursday, U.S. Senators Maria Cantwell (D-WA), Sheldon Whitehouse (D-RI), Bernard Sanders (I-VT), and Bill Nelson (D-FL), were joined by Representatives Bart Stupak (D-MI-01), Chris Van Hollen (D-MD-08), and Rosa DeLauro (D-CT-03) and representatives from the airline and farming industries, and labor urging swift action to close a number of oil futures market loopholes that numerous experts have concluded are responsible for today’s unprecedented run-up of crude oil prices.  Currently insufficient regulatory regimes governing the buying and selling of West Texas Intermediate crude oil future contracts and other U.S. delivered energy products are being exploited by sophisticated “paper” speculators who never intend to receive physical delivery of the oil. 

 

Earlier this week, Cantwell introduced the Prevent Unfair Manipulation of Prices Act of 2008 (S.3185) with Senators Whitehouse, Sanders, Kerry, Nelson, Wyden, and Clinton to close multiple loopholes that allow energy futures traders to evade federal oversight and hide their activities from other market traders.  Senator Cantwell believes, and is supported by many industry experts, that enacting the PUMP Act into law will quickly bring down the world oil price to the marginal cost of production, which the oil industry and oil market experts believe is around $60 a barrel.  Congressman Stupak introduced companion legislation in the House of Representatives last week.  Representatives Van Hollen and DeLauro have introduced similar legislation, the Energy Markets Anti-Manipulation and Integrity Restoration Act of 2008 (H.R. 6341).

 

“With the Fourth of July rapidly approaching, working families and businesses are overwhelmed by punishing gas, diesel and home heating oil prices and are struggling to make ends meet,” said Cantwell.  “Americans know that the current price of oil cannot be explained by supply and demand fundamentals and are demanding that we get to the bottom of these today’s out-of-control prices at the pump.  We urgently need to close the loopholes that may be allowing a few rogue traders to hijack the oil futures market and force Americans to pay nearly twice as much at the pump as they should.”

 

“Rhode Islanders are facing the highest gas prices they’ve seen since the fuel crisis days of 1981 – prices that can no longer be explained by the simple economics of supply and demand.  With the long summer months upon us, things could get much, much worse,” said Whitehouse, a member of the Senate Judiciary Committee and former Rhode Island U.S. Attorney and Attorney General.  “Market speculators and energy traders have been skating around the law, playing games with energy markets and driving up prices.  This bill will close loopholes, prevent excessive speculation, and help bring prices down.”

 

Sanders said, “Hedge funds and major Wall Street financial institutions are making tens of billions of dollars each and every year by speculating on oil futures, while working people are paying $4 for a gallon of gas and seniors wonder how they’ll heat their homes next winter.  In my view, we need to deal aggressively with financial institutions and hedge funds that are speculating in oil futures and artificially driving up oil prices by as much as 50 percent.”

 

“Today, Americans are seeing the impacts of unregulated energy trading at their gas pumps – and it’s not a pretty sight,” said Senator Ron Wyden (D-OR), another co-sponsor of the PUMP Act. “Consumers shouldn’t be the victims of people who are gambling on energy markets just to make a fast buck.”

 

“All sectors of our economy have been hit hard by rising energy costs and those costs are passed along to American consumers in the form of higher prices for gasoline, food, transportation and manufactured goods,” said Congressman Stupak, chairman of the House Energy and Commerce Subcommittee on Oversight and Investigations.  “Addressing high energy costs is a critical issue that must be priority No. 1 for Congress.  Experts testified before my subcommittee on Monday that oil prices could drop by as much as 50 percent within 30 days if the PUMP Act were enacted.  Now is the time for Congress to take up this comprehensive legislation and close off the loopholes that are allowing speculators to manipulate the markets.”

 

“With high fuel prices squeezing our constituents and burdening our economy, we in Congress have a responsibility to act,” said Representative Van Hollen.  “While Members of Congress may not agree on every aspect of our energy policy, there is one principle on which we should all be united: our energy markets should serve the legitimate needs of energy consumers and producers, not enrich a narrow group of ‘hot money’ speculators at the public’s expense.”

 

“Everyday at the gas pump Americans are paying the price for what may be the improper manipulation of today’s energy and agricultural futures markets.  We can no longer allow unethical speculators free reign to play these games while our entire economy hangs in the balance.  It is time to empower the CFTC to do its regulatory job,” said Congresswoman DeLauro, chairwoman of the Agriculture Appropriations Subcommittee, which will hold a CFTC oversight hearing following the 4^th of July district work period.

 

 

 

 

 

 

 

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