Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Mr. SANDERS. Mr. President, as we are about to begin the Fourth of July district work period in my State and throughout this country, many people are going to be getting into their automobiles and they are going to be traveling. In general, people who live in rural States such as Vermont don't have the option of getting on a subway. They don't have the option of getting on a bus to get to work. They use their automobile. In Vermont and all across this country, people who are driving have noticed that the price of gasoline at the pump has soared and is today much higher than it used to be.

According to the Energy Information Administration, the national average retail price for regular unleaded gasoline is $3.70 a gallon--the highest price for this time of year since 2008. According to the AAA, drivers in three States have paid over $4 a gallon at the pump for more than a month, and those States are Hawaii, California, and Alaska. In my home State of Vermont, the current average for a gallon of gas is about $3.73.

When the price of gasoline goes up, a lot of people get hurt and the economy gets impacted. But mostly it affects working people who have no other option but traveling by car, and many of these workers are making $10, $12, $15 an hour; and many of these workers have seen declines in their wages in recent years. Yet, in order to get to work to make a living, they have to get in the car and they have no choice but to pay soaring gas prices.

While gas prices are soaring, people should not be shocked or will not be shocked to know that the big oil companies, which have racked up $1.2 trillion in profits since 2001, are now telling us that the reason gas prices are going up is because of the volatile situation in Iraq. That is why suddenly gas prices have gone up--because of the conflict in Iraq.

The American people are sick and tired of hearing from the big oil companies using every excuse they possibly can. If it is snowing, the price of gas goes up. If there is conflict in the Middle East, the price of gas goes up. If it is raining, if it is sunny, if it is somebody's birthday, the price of gas goes up. Interestingly enough, we don't see that same logic when the price of gas should be going down, but it always seems to be going up. Meanwhile, the five biggest oil companies in America--again, not too surprisingly--continue to make huge profits. During the first quarter of this year, ExxonMobil made a profit of $9.1 billion--the first quarter; Shell made $7.3 billion, Chevron made $4.5 billion, and ConocoPhillips made $2.1 billion. The price of gas at the pump soars and the major oil companies make huge profits.

Last year, these five major oil companies--ExxonMobil, Shell, Chevron, ConocoPhillips--made $93 billion in profits. ExxonMobil alone made nearly $33 billion in profits in 2013.

So in the State of Vermont and all over this country, working people are seeing, in many cases, declines in their wages. Yet they have to get to work. Meanwhile, the price of oil, the price of gas soars, and the oil companies make out like bandits.

Here is the interesting point: When I was in high school--and I suspect kids all over the country are still being taught this--we learned about a theory called supply and demand. What supply and demand is about is when there is a lot of supply and limited demand, prices go down. When there is limited supply and a lot of demand, prices go up.

Well, guess what. To nobody's surprise, that is not the way it works in the oil industry. Today, there is more supply and less demand for gasoline than there was 5 years ago when the average price of a gallon of gas was just $2.69 a gallon. So let me repeat that. More supply, less demand, and today the price of a gallon of gas is $3.70 a gallon, but 5 years ago it was $2.69 a gallon. Where is the logic of supply and demand? Where is that process?

According to the EIA, there has been a 9 million barrel increase in the supply of gasoline over the past 5 years--a 9 million barrel increase. Since 2009, the United States has increased gasoline supplies by 4.3 percent. Supply has gone up. What about demand? According to the EIA, the United States is consuming 96,000 fewer barrels of gasoline than it did in 2009--a 1-percent drop in demand compared to 5 years ago. If the supply and demand theory were true, gasoline prices would be a bit lower--a bit lower--than they were 5 years ago--somewhere perhaps in the neighborhood of $2.69 a gallon. Instead, despite the increase in supply, despite the lowering of demand, the average price for a gallon of gas in the United States has gone up by nearly 38 percent over the last 5 years, from $2.69 a gallon to $3.70 a gallon. Let me repeat. Since 2009 the supply of gasoline has gone up by more than 4 percent and demand for gasoline has gone down by 1 percent. Yet prices at the pump are up by nearly 38 percent.

People say: We need more oil, we need more gas. It doesn't matter--supply up, demand down, prices of gas at the pump soaring.

The truth is the high gasoline prices have less to do with supply and demand and more to do with Wall Street speculators driving prices up in the energy futures market. Over a decade ago, speculators only controlled about 30 to 40 percent of the oil futures market. Today, Wall Street speculators control about 80 percent of this market. Let me repeat. Wall Street speculators control about 80 percent of the oil futures market, even though many of them will never use a drop of the oil. People think that when people own oil on the oil futures market, they actually own it because they are going to use it. Maybe it is the airline industry; maybe it is the trucking industry; maybe it is oil fuel dealers. Wrong. The oil futures market is controlled by speculators who never use the end product and whose only goal in life is to drive prices up to make a huge profit, and that is exactly what they do.

We, as the elected officials of this country, who are presumably representing working families around America, have a responsibility to do everything we can to make sure the price of gasoline at the pump is based on the fundamentals of supply and demand and not Wall Street greed. That is why I am introducing legislation today to require the Commodity Futures Trading Commission to use all of its authority, including its emergency powers, to eliminate excessive oil speculation.

This bill is cosponsored by Senators Levin, Nelson, Blumenthal, McCaskill, Franken, Brown, Cardin, Baldwin, Whitehouse, Markey, Klobuchar, Shaheen, Merkley, and Hirono. Congresswoman Rosa DeLauro is introducing the companion bill in the House. I thank all of these Members for their support.

Our legislation, the Energy Markets Emergency Act, is identical to bipartisan legislation that overwhelmingly passed the House of Representatives by a vote of 402 to 19 during a similar crisis in June of 2008.

Specifically, our bill directs the CFTC to do the following within 14 days of enactment:

No. 1: Immediately curb the role of excessive speculation in any contract market within the jurisdiction and control of the Commodity Futures Trading Commission, on or through which energy futures or swaps are traded.

No. 2: Eliminate excessive speculation, price distortion, sudden or unreasonable fluctuations or unwarranted changes in prices or other unlawful activity that is causing major market disturbances that prevent gasoline and oil prices from accurately reflecting the forces of supply and demand.

There is now a growing consensus--this is not just the opinion of Bernie Sanders--there is a growing consensus that excessive speculation on the oil futures market is significantly contributing to the high prices the American people are seeing at the pump.

ExxonMobil, Goldman Sachs, the IMF, the St. Louis Federal Reserve, the American Trucking Association, Delta Airlines, the Petroleum Marketers Association of America, the New England Fuel Institute, the Consumer Federation of America, and many other organizations have all agreed that excessive oil speculation has significantly increased oil and gas prices.

Just a few years ago, Goldman Sachs--perhaps the largest speculator on Wall Street--came out with a report indicating that excessive oil speculation is costing Americans 56 cents a gallon at the pump--56 cents a gallon. I personally think that is a conservative estimate, but it is interesting that it comes from Goldman Sachs itself.

The CEO--and what can we say--the CEO of ExxonMobil has testified in the past that he believes excessive speculation has contributed as much as 40 percent to the price of a barrel of oil.

So what you are hearing is some of the Wall Street people--in a rare moment of honesty--acknowledging the impact of speculation. You are hearing the head of the largest oil company in America acknowledging the impact of speculation on gas prices. I think we do not need a whole lot of evidence to suggest this is a serious problem.

Three years ago my office obtained confidential information about how much Wall Street speculators were trading in the oil futures market on just one day--and that day was June 30, 2008--when the price of oil was over $140 a barrel and gas prices were over $4 a gallon. Here is what some of the biggest oil speculators were doing back then, on just one day of trading: June 30, 2008. This goes on every day. One day: Goldman Sachs bought and sold over 863 million barrels of oil, Morgan Stanley bought and sold over 632 million barrels of oil, Bank of America bought and sold over 112 million barrels of oil, Lehman Brothers--obviously now bankrupt--bought and sold over 300 million barrels of oil, Merrill Lynch--bought by Bank of America--bought and sold over 240 million barrels of oil.

The only reason these firms were betting on the price of oil was to speculate and to make money. Goldman Sachs, Bank of America, they do not use oil. Their only function in this process is speculation, driving up prices and making huge profits.

The rise in oil and gasoline prices was entirely avoidable. The Dodd-Frank Wall Street Reform and Consumer Protection Act required the CFTC to impose strict limits on the amount of oil that Wall Street speculators could trade in the energy futures market by January 17, 2011--over 3 1/2 years ago.

Unfortunately, the CFTC has been unable to implement position limits due to opposition from Wall Street and a ruling by the DC Circuit Court. This is simply unacceptable. Millions and millions of Americans who are filling up their gas tanks today are disgusted. They know they are being ripped off, and they want us to protect their needs. The time is now to provide the American people relief at the gas pump before the situation gets even worse.

I urge my colleagues to cosponsor this legislation

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