Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012
Floor Speech
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Mr. COURTNEY. Mr. Chair, I rise in support of this amendment, as someone who also voted against the Wall Street bailout.
I, however, would certainly disagree with the conclusion that speculation is not a factor in the price of oil and certainly the huge swing that we have seen just in the last 6 months in this country. And I would cite ExxonMobil as my validator in terms of that point.
On May 14 in Forbes Magazine, hardly a Democratic left-wing publication, there was a story regarding an interview with Rex Tillerson, the CEO of ExxonMobil, who stated that the real price with traditional supply and demand for oil and gas should be roughly between $60 and $70 a barrel, not $115 a barrel, which it was back in mid-May. And this is what the article said: that Mr. Tillerson stated that the reason it's above $100 a barrel is due to the oil majors using futures contracts to lock in current high prices and speculation that is engineered by the high-frequency trading of quantitative hedge funds.
Again, traditional supply and demand, according to ExxonMobil, suggests that the price of oil and gas should be roughly $60 to $70. Well, how will the CFTC bring us back to a market that is actually connected to supply and demand forces as opposed to the market that we have today?
Under Dodd-Frank, what the CFTC was given was the authority to impose position limits on noncommercial interests that have swamped the commodities trading markets of this country since Congress foolishly deregulated the commodities markets back in 2000. Today, the number of noncommercial traders in the commodities markets is twice what it was in 2000 and using virtually no money down, because the margin limits are almost nonexistent. They have basically hijacked this market so that real end-users, the people who depend on futures trading to lock in positions, whether it's airlines or back home in Connecticut whether it's oil delivery guys who are trying to figure out whether they can offer lock-in contracts for next winter, they have been basically driven from this market. In Connecticut today you cannot get a lock-in contract for next winter because of the fact that these traders now have absolutely no confidence in whether or not this market will be in any rational place 6 months or 8 months from now.
So the need for the CFTC to reimpose some reasonable ``appropriate limits,'' which is what the Dodd-Frank bill empowers them to do, is the reason why their staff needs
to be put into place so that we can have a market that existed back in the 1990s, our parents' commodities trading market, which was a stable market which was basically for the use of end-users and not for people who were using high-frequency trading, which the CEO of ExxonMobil cited as the cause of the swing in prices that we're seeing.
And let's be clear here, folks. Supporting this budget from the majority is not about being a deficit hawk. Secretary Ray Mabus from the Navy testified before the House Armed Services Committee that every $10-a-barrel increase of oil costs the Navy, in terms of annual fuel costs, $300 million a year. If you look at what the CEO of ExxonMobil says, the Navy right now is overpaying easily on an annualized basis anywhere from $300 million to $500 million a year, and that's just one branch of the military. The Air Force uses a greater amount of fossil fuels of oil and gas than the Navy does.
So if you are truly a deficit hawk, if you really want to make sure that the Pentagon, which is going to be going through some gut-wrenching decisions about whether or not to provide for the Warfighter in this country and protect weapons platforms that we need to defend this country, then we need a high-functioning CFTC to make sure that the Pentagon as well as the rest of the government at the State and local level are not overpaying for gas and oil.
The taxpayer has a huge stake in making sure that this agency, the CFTC, has adequate funds to do its job because the savings to not just consumers and small businesses but the savings to the taxpayers will be in the billions and billions of dollars. It far exceeds any of the claimed savings that this budget seeks to obtain through the cuts, through the unbelievably shortsighted cuts to the CFTC in terms of being able to do its job.
We should oppose this budget. We should support this amendment which is on the floor of this House.
Mr. BROUN of Georgia. Will the gentleman yield?
Mr. COURTNEY. No, I will not yield.
Not only small businesses and consumers but the taxpayer needs us to act to make sure that we have a rational oil trading market that is tied to real traditional supply and demand, which the CEO of ExxonMobil has told us is overpriced today to at least $20 to $30 a barrel.
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