Statements on Introduced Bills and Joint Resolutions

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Mr. SANDERS. Mr. President, I think every American understands that the very high price of oil and gas is having a very negative impact on our fragile economic recovery. Also, in rural States, such as Vermont, Montana, and other rural States, it is wreaking real hardship on working people who in many cases drive long distances to work. In Vermont certainly, it is not uncommon for people to be driving 50 miles to their job and 50 miles back. When the price of gas gets to be $3.80 a gallon or $4 a gallon, it really hurts. When wages are stagnant, when many people have seen a decline in their paychecks, high gas prices have just taken another chunk out of their limited income. It is something that as a Congress we have to address.

The price of oil today, while declining somewhat in recent weeks, is still over $97 a barrel. In Vermont, it is over $3.80 a gallon at the pump. The theory behind the setting of oil prices that we learned in high school is that oil prices are set by supply and demand. When there is limited supply and a lot of demand, oil prices go up. When there is a lot of supply and limited demand, oil prices should go down.

So let's be clear: The fact is today there is more supply than there was 2 years ago, today there is less demand than there was 2 years ago; therefore, oil prices should be substantially lower than was the case 2 years ago. The fact, however, is just the opposite. In Vermont today, gas prices are $3.80 a gallon. Two years ago, they were approximately $2.44 a gallon. So the explanation of supply and demand in terms of why oil prices have soared just does not carry any weight.

While we cannot ignore the fact that big oil companies have been gouging consumers at the pump for years and have made almost $1 trillion in profits over the past decade, there is mounting evidence that the increased price of gasoline and oil has nothing to do with supply and demand and everything to do with Wall Street speculators who are dominating the oil futures market and driving prices up, up, and up. Ten years ago, speculators only controlled about 30 percent of that market. Today, Wall Street speculators control over 80 percent--over 80 percent--of the oil futures market, and many of them will never use one drop of that oil. So we are not talking about airlines that use gas and oil. We are not talking about trucking companies. We are not talking about home heating companies. We are talking about speculators whose only function in this entire process is to make as much money as they can by raising prices and then selling.

This is not just Senator Bernie Sanders making this point. Let me quote from a June 2 article from the Wall Street Journal:

Wall Street is tapping a real gusher in 2011, as heightened volatility and higher prices of oil and other raw materials boost banks' profits ..... by 55 percent in the first quarter.

Banks' profits are soaring as a result of oil speculation. That is the fact. It is not just the Wall Street Journal. The CEO of ExxonMobil, Rex Tillerson, in response to a question at a recent Senate hearing, estimated that speculation was driving up the price of a barrel of oil by as much as 40 percent. That is the CEO of ExxonMobil. He might know something about that issue.

The general counsel of Delta Airlines--a major consumer of fuel--Ben Hirst, and the experts at Goldman Sachs have all said that excessive speculation is causing oil prices to spike by 20 to 40 percent.

Even Saudi Arabia, the largest exporter of oil in the world, told the Bush administration back in 2008--when the Bush administration went to them and said: We need to drive prices down. Produce more oil. Sell more oil--they said that is not the problem. Saudi Arabia said: We have all the oil we need. The problem is speculation. And they estimated that speculation could result in about $40 a barrel.

In other words, the same Wall Street speculators who caused the worst financial crisis since the 1930s through their greed, recklessness, and illegal behavior are back at it again, and this time they are ripping off the American people by gambling that the price of oil and gas will continue to go up and up and in that process are driving the price of gas and oil up and up.

Sadly--and this is the important point--this spike in oil and gasoline prices was entirely avoidable. This was avoidable. The Wall Street Reform Act that we passed last year, the Dodd-Frank legislation, required--underline ``required''--the Commodity Futures Trading Commission to impose strict limits on the amount of oil Wall Street speculators could trade in the energy futures market by January 17 of this year.

We passed legislation that said to the Commodity Futures Trading Commission: You have to impose rules by January 17 with strict limits on excessive oil speculation.

Mr. President, 6 months have come and gone. They have not done what they were required to do.

Almost 5 months later, the CFTC has still not imposed those speculation requirements. In other words, the chief regulator on oil speculation is clearly breaking the law and is not doing what he is supposed to be doing.

Last month I held a meeting in my office with Mr. Gary Gensler, who is the Chairman of the CFTC, and six other Senators. I have to tell you that I was extremely disappointed in both the tone of that meeting and the complete lack of urgency at the CFTC with respect to cracking down on oil speculators as required by the law.

Therefore, today I have introduced legislation, along with Senators BLUMENTHAL, MERKLEY, FRANKEN, WHITEHOUSE, and Bill Nelson to end excessive speculation once and for all--once and for all. The American people cannot continue to be ripped off by Wall Street which is artificially driving up the price of oil and gas.

I am very pleased to also announce that Congressman Maurice Hinchey will be introducing this legislation in the House. This legislation mandates that the Chairman of the CFTC take immediate action to eliminate excessive oil speculation within 2 weeks--2 weeks.

One. Our bill requires the Chairman to establish speculative oil position limits equal to the position accountability levels that have been in place at the New York Mercantile Exchange since 2001.

Two. This bill requires the Chairman of the CFTC to double the margin requirements on speculative oil trading so that Wall Street investment banks back their bets with real capital.

Three. Under this bill, Goldman Sachs, Morgan Stanley, and other Wall Street investment banks engaged in proprietary oil trading would be classified as speculators instead of bona fide hedgers.

Four. The Chairman of the CFTC would be required under this bill to take any other action necessary to eliminate excessive speculation and ensure that the price of oil accurately reflects the fundamentals of supply and demand.

I am pleased to announce that this legislation already has the support of a very diverse group of organizations representing small businesses, fuel dealers, consumers, workers, airlines, and farmers. Some of those organizations are: Americans for Financial Reform; the Consumer Federation of America; Delta Airlines; the Gasoline and Automotive Service Dealers of America; the International Brotherhood of Teamsters; the Main Street Alliance; the National Farmers Union; New England Fuel Institute; Public Citizen; and the Vermont Fuel Dealers Association. This is just a few.

I want to thank all of those organizations for their support. The American people are sick and tired of being ripped off at the gas pump. People in the northern States, whether it is Vermont or Minnesota, worry about what the price of home heating oil will be next winter. What we are seeing now in terms of excessively high oil and gas prices has nothing to do with supply and demand and everything to do with Wall Street speculation.

This Congress has told the CFTC to act. They have failed to act. Now is the time for us to tell them exactly what must happen.

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