Cantwell: New Data Shows Excessive Speculation May Cost Spokane Drivers $8-16 Per Tank
Senator Calls for Crackdown on Excessive Oil Speculation that is Artificially Inflating Gas Prices Gas up 65 cents per gallon in Spokane over last two months, burdening families and economic recovery
SPOKANE, WA– Today, U.S. Senator Maria Cantwell (D-WA) demanded federal regulators use the authorities that Congress granted them in 2007 and 2010 to ensure skyrocketing prices at the gas pump are not the result of excessive speculation or market manipulation. Cantwell released a breakdown of public data showing that excessive oil speculation costs Spokane drivers $8-16 per tank. This “speculative premium” costs drivers up to 64 cents per gallon.
Gas prices in Spokane have gone up 65 cents-per-gallon in just the last two months, hurting small business and burdening families and the economic recovery. Diesel prices are a dollar more per gallon over this time last year, hitting truckers, farmers, and transit services particularly hard. A family of four can expect to pay $337 more to drive this summer than last.
“Spokane drivers are paying at the pump for excessive oil speculation, while federal regulators have failed to act,” Senator Cantwell said.“I pushed to make sure last year’s historic financial reform bill included a way to crack down on excessive speculation, but federal regulators have yet to meet their new responsibilities and Wall Street and big oil lobbyists are jamming up the implementation process. In light of the 65-cents-per-gallon gas price spike in Spokane over the past two months, I am calling on federal regulators to use these new tools to protect families and businesses across the country.”
According to a new data set released today by Senator Cantwell and U.S. Commodity Futures Trading Commission (CFTC) Commissioner Bart Chilton, Honda Civic drivers are paying $8.35 per gas tank due to excessive speculation; Ford Explorer drivers are paying $14.45 more per tank; and Ford F150 drivers, the most popular pick-up, are paying $16.69 more per fill up.
Last month, Cantwell urged the CFTC to crack down on oil speculation that is likely contributing to recent gas prices spikes. In a letter to CFTC Chairman Gary Gensler, Senator Cantwell and 11 other senators urged him to use the new authority granted in last year’s Wall Street reform law to combat excessive speculation. Commodities experts have said that oil speculators are driving up the cost of oil in the wake of news from the Middle East. CFTC Commissioner Chilton responded with a letter confirming that the latest data shows speculative positions in the energy sector are at an all-time high – up 64 percent from June 2008.
Also last month, Cantwell sent a bipartisan letter to the Federal Trade Commission (FTC) calling for an investigation into any links between rising gas prices and a sharp increase in wholesale oil markets. In August 2009, the FTC finalized its Petroleum Market Manipulation Rule, which was promulgated in compliance with legislation Cantwell authored in 2005 and successfully shepherded into law in 2007, making it a crime to manipulate wholesale oil markets. She is now calling on the consumer protection agency to use its new authority to meet their responsibility to protect consumers.
In the letter sent last month to the FTC, Cantwell noted that the price per barrel of oil over the past four years has varied drastically despite comparatively little change to the world’s supply and demand. She asserted that the FTC must be more proactive and aggressive in enforcing its market manipulation rule, noting the success the Federal Energy Regulatory Commission (FERC) has had in ferreting out bad actors in the electricity and natural gas markets using identical authority, and she details several questions she wants answered to shed light on any illegal activity that is behind the pain at the pump. She continues: “The high gas prices that are hurting American families and businesses today represent the first major test of FTC’s ability to protect consumers in this market. We urge you to use the authority of the Petroleum Market Manipulation Rule aggressively in order to protect consumers from unnecessarily high and volatile gas and diesel prices.” Senator Rockefeller (D-WV), Chairman of the Senate Committee on Commerce, Science, and Transportation which has jurisdiction over the FTC, also signed Cantwell’s letter. Senators Olympia Snowe (R-MA), Ron Wyden (D-OR) and Mark Pryor (D-AR), all long-time defenders of consumers, signed on as well.
Cantwell has long fought to prevent market manipulation and excessive speculation from artificially driving up the price of oil and prices faced by consumers at the pump. During last year’s financial market reform debate, Cantwell pushed for tough and effective rules and the elimination of loopholes to prevent speculators from manipulating the oil market. She fought to ensure that the bill required the CFTC to enact position limits to diminish, eliminate, or prevent excessive speculation that disrupts the market. Mandatory speculative position limits, which the CFTC are in the process of setting now, and strong anti-manipulation tools were main contributors to Cantwell’s eventual support of the Wall Street reform law.
Cantwell brought to the larger financial regulatory reform effort the knowledge she gained from a decade of fighting to protect Washington state ratepayers, including her historic battle to expose the ways Enron manipulated West Coast electricity markets to jack up prices. Using the lessons learned, Cantwell helped author provisions in the 2005 Energy Bill that made it a crime to manipulate electricity or natural gas markets. To date, the Federal Energy Regulatory Commission (FERC) has used the law to conduct 93 investigations resulting in 45 settlements and civil penalties of $122,230,000 and disgorgement of profits totaling $35,945,000. Cantwell also secured a provision in the Energy Policy Act of 2005 that prevented a bankruptcy court from forcing Snohomish Public Utility District (PUD) and its customers to pay millions of dollars in termination fees for electricity that was never delivered. This measure reaffirmed FERC’s authority to decide whether charges related to manipulated power contracts could be deemed invalid.
In 2005, Cantwell first introduced legislation that would create a federal ban on oil market manipulation to prevent Enron-style manipulation schemes from happening to the oil industry. Cantwell’s legislation banning manipulation in the oil and petroleum markets became law in the 2007 Energy Bill. Her provision empowers the FTC to levy civil penalties of up to $1 million per day. Over the course of the FTC’s nearly two-year rulemaking needed to fulfill its Congressionally-mandated responsibility to prevent manipulation in the oil and petroleum markets, Cantwell aggressively pushed the Commission to lay out the strongest rules possible. The final FTC rule went into effect on November 4, 2009 and essentially adopted all of Cantwell’s recommendations.
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