Senator Bernie Sanders (I-VT) called on Tuesday for an investigation into oil price manipulation. He also proposed a 30-day deadline for federal regulators to use emergency powers to curb excessive speculation in crude oil markets.
“We must do everything that we can to make sure that oil and gasoline prices are transparent and free from fraud, manipulation, abuse and excessive speculation,” said Sanders, a member of the Senate energy committee.
Over the past five months, the national average price for a gallon of gasoline has gone up by more than 41 cents. The price hikes come at a time when U.S. oil inventories reached a three-decade high while demand for gasoline is lower than four years ago when prices averaged less than $2.30 a gallon.
Sanders spoke about rapidly rising gas prices during a Senate floor speech on two amendments he proposed to the farm bill.
“The skyrocketing cost of gasoline and oil is causing tremendous hardship to the American consumer, small businesses, truckers, airlines and fuel dealers. In fact, as we struggle to claw our way out of this terrible recession, high oil and gas prices are enormously detrimental to the entire economic recovery process,” Sanders said.
One Sanders amendment to the farm bill would make the commission that regulates commodities and the Justice Department’s Oil and Gas Price Fraud Working Group conduct a six-month investigation to determine whether any company or individual in the United States has manipulated the price of gasoline, crude oil, heating oil, diesel fuel or jet fuel.
The investigation would be similar to one already underway in Europe, where the European Commission on May 13th announced that it was investigating the possibility that BP, Shell, Statoil and others “may have colluded in reporting distorted prices to a Price Reporting Agency to manipulate the published prices for a number of oil and biofuel products.”
A second Sanders amendment would give the commission 30 days to use all of its authority, including its emergency powers, to eliminate, prevent or diminish excessive oil speculation. It also would make the commission ensure that oil and gasoline prices are based on the fundamentals of supply and demand.
Exxon Mobil, Goldman Sachs, the American Trucking Association, Delta Airlines, the Petroleum Marketers Association of America, the Consumer Federation of America, the International Monetary Fund and a 2012 report from the St. Louis Federal Reserve all have indicated that excessive oil speculation significantly increases oil and gasoline prices.
The chairman of the commodity commission has stated that Wall Street oil speculators now control more than 80 percent of the energy futures market, a figure that has more than doubled over the past decade. This excessive oil and gasoline speculation is clearly causing major market disturbances that prevent the market from accurately reflecting the forces of supply and demand.
To read the amendment on price fixing, click here.
To read the amendment on emergency action by the CFTC, click here.