Rutland Herald: Sanders Pushing For Curbs On Oil Speculators

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Sanders Pushing For Curbs On Oil Speculators

By Bruce Edwards, Herald Staff

Sen. Bernard Sanders is urging federal regulators to rein in speculators whom he accuses of artificially driving up the price of crude oil.

Sanders, I-Vt., called on the Commodity Futures Trading Commission to use its emergency powers to impose speculation limits, increase margin requirements and suspend trading, in order to ensure that oil prices truly reflect supply and demand.

"I hope you will seize this opportunity to redefine the CFTC as a strong regulator that will do everything within its power to benefit consumers," Sanders said in a letter last week to Gary Gensler, the new commission chairman.

Sanders said the price of crude oil rose to more than $65 a barrel this week - a 70 percent jump since mid-January.

He said the price spike can't be justified by the argument of supply and demand.

"The only problem with that argument right now is that according to the latest data crude oil inventories in the United States are at their highest levels on record," Sanders said in a Friday phone interview. "And in terms of demand, we are in the midst of a major recession, an international recession, and in the United States demand has dropped to its lowest level in more than a decade."

According to the federal Energy Information Administration, demand for gasoline over the four-week period that ended May 22 averaged about 9.2 million barrels a day, down 0.4 percent from the same period last year.

Sanders said the International Energy Agency predicts global demand for oil will drop this year to its lowest level since 1981.

He said industry experts attributed 50 percent of the price of crude oil last year to speculators.

Joe Choquette, a spokesman for the Vermont Petroleum Association, said Friday the recent jump in gasoline prices reflects increased demand.

"Regarding demand and crude oil prices overall, gasoline demand has actually started to recover some, even though it is down from last year," Choquette said in an e-mail. "The increase in crude oil prices is a worldwide phenomenon, not a U.S. phenomenon, but it apparently reflects the belief that economic signs are improving."

As far as speculators being to blame for the spike in prices, the Vermont Petroleum Association had no comment.

Another trade group, the Vermont Fuel Dealers Association, last year called on the federal government to regulate Wall Street speculators.

Sanders said that last summer as crude oil hit a record $147 a barrel and gasoline hit $4 a gallon, the commission failed to exercise its authority to regulate the energy markets.

"The failure of the CFTC to take strong steps to limit speculation was one of the contributing factors to the current financial crisis, and played a significant role in precipitating not only the present economic recession, but also the largest taxpayer bailout in the history of the world," Sanders said in his letter to Gensler.

Sanders singled out investment banks Goldman Sachs and Morgan Stanley as culprits in the oil futures speculation business.

Rep. Peter Welch, D-Vt., has also called for a crackdown on oil speculators — leading the effort to close the Enron loophole.

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