WV Dems: End oil speculation practice - Business, Government Legal News from throughout WV

WV Dems: End oil speculation practice

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With the price of gas climbing ever higher – with many thinking prices as high as $5 per gallon could be seen in the near future – lawmakers are scrambling for solutions to a problem a huge chunk of the American public is feeling everyday.

While gas prices are tied a large number of factors, including supply and demand issues, political pressures in the Middle East and other international events, oil speculators are in the sights of West Virginia's lawmakers in Washington. Sens. Jay Rockefeller and Joe Manchin, as well as U.S. Rep. Nick Rahall sent a letter to the U.S. Commodity Futures Trading Commission urging new policies to regulate oil speculation per the Wall Street reform law passed in 2010.

Speculating on oil prices is a way that investors can profit by predicting the price of oil in the future. The letter to the CFTC was signed by 70 Democratic lawmakers on Monday.

 "It's unacceptable that a few people on Wall Street trying to make an easy profit can mean higher gas prices for West Virginians," Rockefeller said.  "The CFTC needs to do its job better so that struggling families trying to make ends meet aren't paying more because Wall Street insiders are betting against them."

The 2010 reform law required the CFTC to put position limits on contracts for oil and other commodities. While some of those restrictions have been approved by the agency since October, they have yet to go into effect.

"Congress determined that speculative position limits are an effective and critically important tool to address excessive speculation in America's oil and gasoline markets," the letter to the CFTC states. "It is one of your primary duties – indeed, perhaps your most important – to ensure that the prices Americans pay for gasoline and heating oil are fair, and that markets in which prices are discovered operate free from fraud, abuse and manipulation."

The letter cites reports from Exxon Mobil, Goldman Sachs, the Saudi Arabian government and more that indicate speculation significantly increases oil and gasoline prices.

Analysts are divided as to whether speculation is as strong of an effect as some lawmakers have posited.

Manchin said that he is pushing for a national energy plan that uses all domestic energy resources since his "first day in the Senate."

"But until we have a plan in place, we need to do everything in our power to crack down on these out-of-control price hikes.  By some accounts, speculators have increased the price of a barrel of oil by as much as 25 percent, so I'm urging the Commodities Futures Trading Commission to step in and put a stop to these abuses so that West Virginia families don't have to pay the price," he said.

Rep. Nick Rahall said family budgets are "suffering at the hands of market speculating," a practice he and many others blame for driving up the price of gasoline.

"The CFTC can apply a quick and meaningful brake by fulfilling an important duty to ensure prices hardworking Americans pay for gas and heating oil are free from fraud, abuse and manipulation," Rahall said. "I have long advocated a sustainable, long-term energy policy to reduce our dependence, especially on foreign oil, and continue to support investing in energy research and technologies to take advantage of our nation's domestic energy sources, like coal."

This is one of many times Rockefeller has focused in on the practice of oil speculation. Just last spring, Rockefeller called on the CFTC to better control speculation.

"We need a comprehensive strategy to bring gas prices down in the short and long-term, and CFTC action would be another important step," Rockefeller said. "We also need to crack down on the larger windfall profits that the oil companies get as gas prices go up.  We should all be able to rally around making gas prices more affordable."

 

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