July 23, 2008

Whitehouse Calls for Action to Curb Excessive Speculation in Energy Markets

Mr. WHITEHOUSE. Today in Rhode Island, drivers are paying more than $4 a gallon for gas, and they’ve been paying those prices for more than a month now.

We all know that eight years of two oil men in the White House equals over $4-a-gallon gas – a nearly six-fold increase in oil prices. These record oil prices have sent consumer costs skyrocketing, not only at the pump, but at the supermarket and the department store. Food and household goods take energy to produce and transport, and have become more and more expensive.

While George Bush and Dick Cheney’s friends in the oil industry celebrate grotesque profits, ordinary Americans struggle just to make ends meet. Families in Rhode Island and across the country are having to choose between filling their tank and feeding their families; between heating their home and buying needed medicine. They’re frustrated, they’re angry, and they’re looking for solutions anywhere they can find them.

Unfortunately, rather than take steps that will help consumers today, the Bush Republicans are now trying to harness Americans’ anger and frustration, and of all things, use it to capture more inventory for Big Oil. The energy companies have already bought up 68 million acres of public lands to drill – and they’re just sitting on it. They’re spending more buying back stock than they are drilling these holdings. Now, rather than drill what they have, they just want more.

The Administration and its allies have said that opening up more land to drilling is the one and only way to lower the price of gas in this country. That is just flat wrong. The United States owns three percent of the world’s oil reserves, and consumes 25 percent of the world’s oil. The measures endorsed by the Administration and its allies would have zero effect on gas prices, zero effect for at least a decade. Even then, the Energy Information Administration projects that these proposals aren’t likely to make any significant dent in gas prices. Cold comfort for Americans who’ve watched gas prices rise by about $3 a gallon while two oil men occupied the White House. We cannot drill our way out of this problem, now or ever.

But that’s not all. Even as the Bush Republicans say that their only answer to our energy crisis is drill, drill, drill, they’ve repeatedly refused our good faith offer to bring their proposal to a vote. If they’re confident that this is the right solution, then give each of us the chance to vote, up or down, based on what we think is right for the people we represent. Why not?

Because, as we’ve seen time and time again, they’re not interested in finding the right solution, in doing right by families who need help today. No, the Bush Republicans are much more interested in playing politics and pouring more money into the pockets of oil companies already reaping world-record, history of the universe profits. Their proposal would encourage our continued dependence on oil, harm our environment, delay our badly-needed transition to the vibrant green economy that beckons us. And make no mistake, if the Republicans would just let us walk through this door, a vibrant green economy does beckon American workers and families.

We need real, common-sense solutions that can make a difference now. One factor most economists believe has played a major role in driving up prices is rampant speculation in the commodities and futures market: something we can address today.

Speculators invest in oil futures with no intention of taking possession of the commodity itself. They’ve historically played a role in the marketplace, but under George Bush’s watch, excessive and irresponsible speculation has exploded. Experts may disagree on whether speculators have run up the price of oil by 10 or 30 or 50 percent, but there is broad and growing agreement that speculation is a serious problem, and that fixing that problem can help bring gas prices down now.

Of course, the big oil companies and, those in Congress who support them, say that the dynamics of supply and demand, not speculation, is the real cause of these massive price increases. There are two problems with that argument. First, we’ve heard testimony from experts who say there’s no way that simple supply-and-demand for oil can explain the huge rise in energy costs that have plagued American families in the last several months.

And second, energy speculation has its own supply and demand in the commodity market. According to data from the CFTC [Commodities Futures Trading Commission], speculators now control 71 percent of the oil market, up from 37 percent when President Bush took office. With relatively constant supplies of futures and expanding – dramatically expanding – demand of speculators, prices have nowhere to go but up.

I am here to support legislation that our colleagues have offered to get to the bottom of the energy speculation boom. Senator Maria Cantwell has been a particular leader, but I want to commend Majority Leader Reid for offering the Stop Excessive Energy Speculation Act of 2008 that would address the problem of excessive speculation.

In the time that remains I will simply ask unanimous consent that my complete remarks be put into the record and urge all of my colleagues to take a look at this problem. When there is $16 billion that used to chase these futures around in the index fund, and it’s now over $300 billion, clearly something is going on in these markets that we need to get a look at, and we should regulate them the way we do other commodities, like grain. I appreciate the courtesy of the President and I yield the floor.