Senate Bill Would Crack Down on Oil Speculation

The price of gas has gotten to be like the weather. Everybody compains about it but nobody does anything. Sen. Bernie Sanders wants to change that. The Vermont independent is introducing legislation that would require federal commodity regulators to halt excessive oil speculation.

“We have a responsibility to do everything we can to lower gas prices so that they reflect the fundamentals of supply and demand and bring needed relief to the American people,” Sanders said.

A provision in last year's Wall Street reform law required regulators to more closely monitor and regulate speculators but the Commodity Futures Trading Commission (CFTC) has failed to do so, Sanders charged.

Rep. Maurice Hinchey (D-N.Y.) plans to introduce a companion measure in the House.

“Once again, the economic well-being of middle-class families is being put at risk by Wall Street,” said Hinchey. “The price of gasoline has spiked up due to record speculation, and small businesses and working people are paying the price. This legislation would immediately implement new rules to ensure the price of fuel is based on supply and demand – not the whims of greedy speculators.”

The legislation drew an enthusiastic response from Public Citizen and other consumer groups.

"Private tax"

"Public Citizen strongly supports the End Excessive Oil Speculation Now Act. We need it right now.," said Robert Weissman, Public Citizen president, who said speculators are imposing a "private tax" on consumers.

"Legal speculation is siphoning money from the pockets and pocketbooks of consumers. Even Goldman Sachs suggests that legal speculation may be adding 65-70 cents to the price of a gallon of gasoline," Weissman said..

"This is the worst kind of tax," Weissman said. "The proceeds of this Wall Street-imposed tax are going to Wall Street interests, giant oil companies and foreign oil interests. The Wall Street-imposed tax is regressive, with working families hit the hardest."

The bills would force the chairman of theCFTC to establish strong position limits to eliminate excessive oil speculation. It also would impose margin requirements so investors would have to back their bets with real capital.

In addition, the measure would classify as speculators bank holding companies, investment banks or hedge funds that engage in proprietary oil trading.

The commission chairman would be given broad power to take any other actions needed to ensure that the price of crude oil, gasoline, diesel fuel, jet fuel, and heating oil accurately reflects the fundamentals of supply and demand. .