House Republicans are looking to add to their already long record of protecting and defending Big Oil. Tomorrow, Republican leaders will bring to the floor the Agriculture Appropriations bill which slashes the Commodities Futures Trading Commission (CFTC) budget – the agency tasked with policing price manipulation in oil markets – by a stunning 44 percent from the President’s budget.
There is no question – American families and small businesses are feeling the impact of stubbornly high gas prices at the pump and won’t benefit from gutting this critical consumer watchdog.
Currently, the American public is paying a speculative “fear premium” of anywhere between $20-30 for a barrel of oil which equates to a 60- to 70-cent increase per gallon at the pump.
Despite desperate attempts by Big Oil and their allies to distort the facts, the American people hold speculators and Big Oil largely responsible for the skyrocketing price of gas. Since 1990, speculators have more than doubled their share of the oil futures market. Back then, they composed roughly 30 percent of the market; they make up nearly 70 percent today. According to the CFTC, speculative positions in energy markets — oil and otherwise — are at an all-time high. In fact, the CFTC recently charged two traders and three firms with price manipulation for allegedly trying to hoard crude oil and scoring a quick $50 million gain.
Bart Chilton, CFTC Commissioner:
When folks pull up to gas pumps, they usually have a choice: regular, premium or super premium gasoline. Regardless of the gas grade, however, everyone at the pump is actually paying premium, at least in the U.S., a Wall Street speculative premium… I think there’s good evidence that excessive speculation is heating up the market and prices have gotten out of line as a result. [6/8]
As McClatchy explained, “that means that 88 percent of bets on price hikes for oil were held by financial players — mainly Wall Street banks and hedge funds that invest for the ultra wealthy — not interests seeking to use the oil.” …Even ExxonMobil CEO Rex Tillerson admitted that speculation is driving up the price of oil, estimating that the price of a barrel should be closer to $60 if governed exclusively by supply and demand. [6/10]
The Agriculture Appropriations bill isn’t the first time the GOP has tried to undermine the CFTC. The original Republican “So Be It” spending bill (H.R. 1) slashed funding for the CFTC by nearly $57 million. With this nearly one-third cut, CFTC Chairman Gary Gensler said, “We would not be able to police…or ensure transparent markets in futures or swaps.”
And last month, Majority Leader Cantor spoke to a group of oil speculators in Chicago promising his caucus would do their part to block the implementation of the Dodd-Frank regulations. He even singled out the CFTC, promising to stop these consumer protections from having an impact. In keeping with this promise, House Republicans are now moving a plan to delay, by 18 months, implementation of stronger CFTC rules to prevent speculation in commodities, including crude oil, gasoline, and heating oil. Today, Representatives Rosa DeLauro, John Larson, Chris Van Hollen, Joe Courtney, and Peter Welch (D-VT) and 72 other House Democrats sent a letter to Speaker Boehner and the GOP leadership calling on them not to bring this bill to the floor.
From the letter:
We write to express our disappointment with your failure to bring legislation to the floor of the House of Representatives that would bring immediate relief to the American people facing ever-rising gas prices, as well as our deep concern with legislation advancing through the House that would lead to further increases in gas prices. We respectfully urge you to refrain from bringing this legislation, H.R. 1573, which would hamper efforts to curb dangerous oil speculation, to the floor and instead work in a bipartisan manner on common-sense initiatives to address excessive speculation and lower gas prices…
Our constituents cannot afford continued gas price increases, and our nation’s businesses cannot afford wild swings in oil prices that make it difficult for them to plan their budgets and hedge their supply risks. Accordingly, we respectfully urge you to refrain from bringing H.R. 1573 to the floor, allow the CFTC to continue its work in reining in speculators, and work in a bipartisan way on policies that will address speculation and decrease rather than increase the price of gas. [6/13]
It is time for Republicans to put partisan politics aside and join with Democrats to tackle high gas prices, protect consumers, and hold Big Oil and speculators accountable.