Oil and the Commodity Futures Trading Comission
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Mr. WYDEN. Mr. President, Senator Cantwell and I were joined on May 11 by 15 other Senators who wrote to the Commodity Futures Trading Commission to request that agency, which has a key role in consumer protection, take immediate action to impose position limits on crude oil futures. We asked that they would act by Monday, May 23.
Position limits are limits on the number of contracts that a financial speculator can buy or sell at any given time. It is extremely important that consumers have this protection so we do not see these speculators increasingly dominate the market. As the Presiding Officer knows, we have a lot of folks who need gas to get to work and get to school. We have trucking companies that depend on affordable fuel. We have restaurants that need fuel. They are all getting clobbered today.
Financial speculators who do not buy oil or consume oil are constantly pulling more of the oil out of the commodities market. What is so troubling about the approach of this key agency is they pretty much said they are not going to do anything soon. We have no sense of urgency. It is not a priority for them to try to tackle this issue. In fact, they are not even going to use their interim authority. They will not even use the interim authority they said they were going to use last year to protect the consumer at this crucial time.
This is particularly unfortunate because somehow they have reached the judgment that the only thing they ought to be moving on is to try to set limits as they relate to commodities generally. I can tell you, my phone is not ringing off the hook about the question of cocoa prices. The American people are not up in arms about what is going on in the cocoa market today. They are concerned about the fact they are getting clobbered on gas pricing. The fact is, 40 percent of the oil futures market is now dominated by financial speculators, and it is way past time for the Commodity Futures Trading Commission to act to tamp down excess speculation and its impact on higher prices.
Senator Cantwell serves with me on the Senate Energy Committee. She has been a leader on this issue. She has constantly tried to blow the whistle on this practice of speculation. It is not the only reason gasoline prices are so high, but it clearly is a significant factor. If the financial speculators are taking so much of the oil and future oil out of the market to essentially hold this dominant position, that means there is going to be fewer opportunities for that person who is trying to get gas at the pump, the person who runs the restaurant, the trucking company, and why it is so important that we have position limits.
This is a crucial consumer issue. The Commodity Futures Trading Commission's refusal to act quickly is especially upsetting because this agency knows better. They know better. Yet they wrote to Senator Cantwell and me and Senator Collins and colleagues that they were not going to do much of anything anytime soon.
In January of 2010, after holding three public meetings on fuel prices, the agency proposed to set position limits on four key energy commodities: crude oil, natural gas, gasoline, and heating oil. At the time, crude was around $75 a barrel.
Congress was so concerned about the need to control financial speculation that it expanded the agency's authority to set speculation limits last July as part of the financial reform legislation. That legislation specifically directed the agency to set limits on nonagricultural commodities such as crude oil within 180 days of enactment. That date has long passed. So rather than getting started on crucial protections for American consumers and businesses, the agency withdrew its January 2010 position limit proposal for energy commodities and basically started all over. It is inexplicable, in my view, that they would not even use their interim authority to take steps to help the consumer who is certainly going to be concerned about gasoline prices as we move into this Memorial Day weekend.
This past January, instead of issuing a final rule within the 180 days called for by the financial reform legislation, they issued another proposed rule. While it is certainly true Congress gave the agency expanded authority to set limits on multiple speculation holdings in the financial reform bill and not just future contracts, the result is there is not any limits at all. That is the bottom line for the consumer today.
Under the schedule proposed by the agency in January's recent proposed rule, final position limits are not going to be imposed until the first quarter of 2012, almost a year from now. That is what it is going to take based on the signals the agency is sending today, and at least one of the Commissioners at the agency, Bart Chilton, has pointed out that this is really contrary to the deadlines in the financial reform law.
We know most Americans walking on Main Street have not heard of the Commodity Futures Trading Commission, but that certainly does not diminish its role in overseeing the commodities markets. That is why I have been pleased to join with Senator Cantwell and other colleagues to continue to press this agency to get out of the regulatory swamp and take steps to go to bat for the consumer and wring the excess speculation out of the oil market sooner rather than later. The agency was directed by the Congress to set speculation limits on more than two dozen commodities.
As I have indicated, I am sure setting position limits on commodities such as cocoa is important, but cocoa is not driving the American economy the way oil is every single day. Americans use about 19 million barrels of oil a day, and two-thirds of the price of a gallon of gas is the cost of the crude oil used to make it. So setting limits on speculation on crude oil is going to have an impact on the price at the pump. The American people and our economy cannot afford to pay the hundreds of millions of dollars a month in additional fuel prices that come out of their wallets while they wait for the Commodity Futures Trading Commission to act. The agency ought to get about doing what it proposed more than 16 months ago, and that is rein in speculation, the speculation that is driving up the prices at the pump. The agency ought to do it now, before more Americans face financial hardship.
The country is obviously entering into the peak summer driving season. That is why I and Senator Cantwell and Senator Collins urged the agency to move, and move now. I wanted to outline the agency's history of foot dragging.
I see we are joined now by Senator Cantwell, who has been our leader in this cause. I say to my colleague, I so appreciate her leadership. This most recent response that we received from the Commodity Futures Trading Commission shows once again no sense of urgency, no sense of priority, not even a willingness to use the interim authority that they could use to go to bat for the American consumer.
I want it understood I am going to do everything I can to be the Senator's partner in this cause until we get these position limits set and get these basic protections that our consumers deserve.
Mr. President, I yield the floor now that Senator Cantwell is here.
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Mr. WYDEN. My colleague has made a very eloquent case with respect to how this hammers the people who need oil on a daily basis--farmers and truckers and restaurants. The Senator from Washington juxtaposed their position compared to the speculators. Those people have a lot higher tax rate, for example, than do the speculators. So there is one advantage after another that the speculators have over the people about whom my colleague and I are concerned.
Is it the understanding of my colleague that the next best step to help those people and small businesses who need oil on a daily basis is to get the CFTC out of the regulatory swamp and to enact these position limits?
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Mr. WYDEN. I thank my colleague. I think it is critically important that the Senate know we are going to keep the heat on, on this issue. Senator Cantwell and I have tried to point out that the agency is dragging its feet. They could use their existing authority. We think the kind of shellacking the American consumers and our small businesses are taking is not right. We are going to continue this fight until they get the consumer protections they deserve.
Mr. President, I yield the floor, and I note the absence of a quorum.
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