Cantwell, Murray to Feds: Curb oil speculators
Source: Seattle PI
Saying that oil speculators are kicking families and small business when they are down, Sens. Patty Murray and Maria Cantwell, D-Wash., want federal regulators to apply the breaks using authority given them in the new financial reform law.
“The Commodity Futures Trading Commission (CFTC) should do its job with the statute we put in place a year ago,” said Cantwell, who helped write the law.
Gasoline prices in Washington have climbed 52 cents a gallon in the last two months, with diesel fuel up by a full dollar. Cantwell estimated that higher gas prices mean “it will cost $337 more for a family of four to drive this summer than last.”
The senators appeared Monday with Seattle area small business owners hit hard by the gas price hike.
The price of oil “dramatically effects” the maritime industry, said Warren Aakervik of Ballard Oil. And the industry must pass on its costs. “The consumer will always pay,” Aakervik added.
The 2010 Wall Street Reform act empowered the CFTC to require higher margin requirements to curb speculation and protect the financial integrity of the futures trading markets.
“Now is the time to exercise that authority . . . Speculators are seizing on recent political turmoil in North Africa and the Middle East to drive energy prices to unwarranted levels,” Cantwell wrote in a recent letter to CRTC Chairman Gary Gensler.
“The loser in this game of oil speculation is the American consumer: Rising oil futures translate into higher gas prices, and that means Americans have less money in their pockets to pay for basic needs,” she added.
In a response, CRTC Commissioner Bart Chilton seemed to confirm much of Cantwell’s argument. He wrote:
“Obviously there are myriad factors impacting prices: the Middle East, Japan and crude transportation issues to make a few. At the same time, however, we have speculators coming into energy markets at blistering pace.
“In fact, the latest data indicates that in the energy sector, speculative positions are at an all time high — up 64 percent from June of 2008 when crude oil prices touched $147.27 per barrel.”
And as seen in 2008, said Chilton, “excessive speculation can impact prices. I’m not suggesting that speculators are driving prices or that they are the cruise control on prices. I do think, however, that they tap the gas pedal at times.”
The commissioner acknowledged that the CRTC is far behind in implementing speculation limits in the energy sector: The financial reform act told it to have limits in place within 180 days.
But a majority on the five-member CFTC has argued for delay on grounds the commission doesn’t have data necessary to impose limits.
Cantwell is impatient: Gasoline prices have reached $4 a gallon at numerous Seattle-area service stations. “In the next 30 years we will be on a roller coaster of oil prices,” she said.
Murray warned that higher gas and oil prices are “kicking families and small businesses when they are down.” She noted that the Great Recession has “a lot of families struggling to stay in their homes and small businesses struggling to keep their doors open.”
“We cannot afford to let this continue,” she said.
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