WASHINGTON — Sens. Amy Klobuchar and Al Franken are taking on oil speculators.
The two Minnesota Democrats joined a group of liberal senators in introducing legislation meant to force federal regulators to stop excessive oil speculation, which they say is the cause of the rising price of gasoline. The senators, lead by Vermont’s Bernie Sanders, blamed speculators with controlling more than 80 percent of the energy futures market, driving up the price of oil when the basic rules of supply and demand should logically be pushing prices down.
“We have more supply than we did three years ago, less demand than since 1997,” Sanders said. “If you’re looking at the fundamentals of supply and demand, oil prices should be going down, not up.”
The bill would set a 14-day deadline for the Commodity Futures Trading Commission to implement rules combating Wall Street oil speculation, a measure similar to one the House of Representatives passed overwhelmingly in 2008. The Dodd-Frank financial reform package had required such measures to be in place by January 2011, but the commission has yet to implement the rules.
Two weeks ago, 70 lawmakers, including both Minnesota senators, wrote the CFTC asking them to take action on speculation, but it’s held back. The legislation introduced today would set 14-day deadline for them to do so.
The average price of gas in Minnesota is $3.74 per gallon, Klobuchar said, and she pointed to a study from Goldman Sachs that said speculation is responsible at least 56 cents of that. Lawmakers and President Obama have called for an “all of the above” approach to reducing oil prices, including long-term measures like increased oil drilling and investments in clean and renewable fuel, but Klobuchar said a crackdown on oil speculation would help relieve the pressure at the pump.
“To just say, we’re only moving on that side, when even the increased supply hasn’t brought down prices would just be wrong. You can’t just say, we’re not going to do anything on speculation but we’ll do all these other things,” Klobuchar said.
Lawmakers have a cross-section of companies and lobbying groups backing their speculation claim, including Exxon Mobil, Delta Airlines, the American Trucking Association and the Petroleum Marketers Association of America, according to a release from Sanders’ office.
“The people who spend every day looking at these markets are the ones who are saying speculators are driving up the cost of gasoline,” Franken said.
Devin Henry can be reached at firstname.lastname@example.org. Follow him on Twitter: @dhenry