Agriculture Reform, Food, and Jobs Act of 2013 - Continued

Floor Speech

Mr. SANDERS. Madam President, I will hold off asking that the pending amendment be set aside until the manager is here. At this time I will address an enormously important national issue, an issue even more important to rural America; that is, the skyrocketing cost of gasoline at the pump, and oil in general, which is causing enormous hardship for the American consumer, small businesses, truckers, airlines, and fuel dealers.

The bottom line is in Vermont and all over this country people are paying an arm and a leg for a gallon of gas and for home heating oil, and it is a very serious economic problem for the individual consumer and for the entire economy at large. In fact, as we continue to struggle to get out of this terrible recession, high oil and gas prices are enormously detrimental to the entire economic recovery process.

These rapidly increasing prices are particularly harmful to rural America where working people often are forced to travel 50 to 100 miles to their jobs and back. If people are paying $3.80 for a gallon of gas, that adds up, and it is money coming right out of their wallets.

Over the last 5 months the national average price for a gallon of gasoline has gone up by more than 41 cents at the pump, even--and this is the important point to make--as U.S. oil inventories reach a three-decade high, and demand for gasoline is lower than it was 4 years ago when prices averaged less than $2.30 a gallon. In other words, what we learned in elementary school about supply and demand and pricing--the foundation of capitalism, if you like--is when there is a lot of supply and limited demand, prices should go down. Right now, there is a lot of supply, less demand, and prices are going up, and I think we need to know why because this impacts our entire economy and millions and millions of consumers.

Our goal must be to do everything we can to make sure oil and gas prices are transparent and free from fraud, manipulation, abuse, and excessive speculation. Let the principles of supply and demand work. Let's eliminate fraud, manipulation, abuse, and excessive speculation, which is exactly what we are experiencing right now.

That is why I will be offering two important amendments that deal with these issues. Both of these amendments are within the jurisdiction of the Agriculture, Nutrition, and Forestry Committee, which is obviously why I am offering them on this bill.

The first amendment, No. 963, requires the Commodity Futures Trading Commission, CFTC, and the Oil and Gas Price Fraud Working Group to conduct a 6-month investigation to determine whether any company or individual in the United States has manipulated the price of gasoline, crude oil, heating oil, diesel fuel, or jet fuel. Such an investigation is already taking place by regulators in Europe.

On May 14, 2013, just 1 week ago, the European Commission announced it was investigating allegations that several companies--including BP, Shell and Statoil--``may have colluded in reporting distorted prices to a Price Reporting Agency to manipulate the published prices for a number of oil and biofuel products.''

I know Ron Wyden, chairman of the Energy and Natural Resources Committee, is also looking at this issue--perhaps in a slightly different way--and I applaud him for doing that. But this amendment basically says right now the European Commission believes there may be fraud among the major oil companies. If that is true in Europe, it may well be true in the United States. So I want the CFTC to investigate that as well.

Amendment No. 963 requires the CFTC to work with European regulators to determine if any company or individual in the United States provided inaccurate information to a price reporting agency for the purpose of manipulating the published prices of gasoline or oil; secondly, to refer any illegal activities to the proper authorities for prosecution; third, to report its findings within 6 months; and lastly, to publish recommendations on its Web site on how to make sure the pricing of gasoline, crude oil, heating oil, diesel fuel, and jet fuel becomes more transparent, open, and free from manipulation, fraud, abuse, or excessive speculation.

The third largest oil company in Europe has estimated that as much as 80 percent of all crude oil product transactions are linked to prices published by Platts, a private price reporting agency, while just 20 percent are linked to trades on the New York Mercantile Exchange or ICE Futures in Europe. In order to calculate prices, Platts depends on oil companies and Wall Street speculators to voluntarily provide details on bids, offers, and transactions for various crude oil and petroleum commodities.

So that is one of the issues we want to take a hard look at to make sure we end those manipulations. The other issue I want to take a hard look at is the issue of speculation on the oil futures market. What we know right now is, according to the CFTC, approximately 80 percent of the oil futures market is controlled not by end users--not by fuel dealers, not by airline companies, not by people who actually use fuel--but by Wall Street speculators. So that is the issue my second amendment deals with.

This amendment addresses an issue that was not satisfactorily addressed in Dodd-Frank, where we attempted to deal with the issue of excessive speculation on the oil futures market. Amendment No. 964 requires the CFTC to use all of its authority, including its emergency powers, within 30 days to address this very important issue.

Once again the American people are at their wits end in trying to understand why oil prices go up despite the fact we have sufficient supply and lack of demand. I am not just speaking for myself but many economists also when I say I believe one of the major reasons for this significantly high price has to do with speculation--speculation on Wall Street.

This amendment requires the CFTC to use all its authority--again, including its emergency powers, which is not what we have done in the past--within 30 days to do the following: to implement position limits to eliminate, prevent, or diminish excessive oil speculation as required by the Dodd-Frank Act, and to immediately curb excessive oil speculation to ensure that oil and gas prices are based on the fundamentals of supply and demand.

As I mentioned earlier, price is supposed to be determined by the amount of supply and the amount of demand. Supply now is very high, demand is relatively low, and so we should be seeing a decline in oil prices rather than an increase. Further, the International Energy Agency recently projected the global supply of oil will surge by 8.4 million barrels a day over the next 5 years, significantly faster than demand, and nearly two-thirds of the increase in oil supply will be in North America. So if you are looking at an abundance of supply and limited demand, we have every reason in the world to believe gas prices at the pump, oil prices in general, should go down.

If they are not going down, we have to ask why. Many of us believe this has to do with excessive Wall Street speculation on the oil futures market.

While we cannot ignore the fact that big oil companies have been gouging consumers at the pump for years and have made over $1 trillion in profit over the past decade, there is mounting evidence that high gasoline prices have less to do with supply and demand and more to do with Wall Street speculation jacking up oil and gas prices in the energy futures market. Ten years ago--and this is a very important point for people to understand--10 years ago speculators only controlled--``only'' is probably the wrong word, but they controlled about 30 to 40 percent of the oil futures market. Today Wall Street speculators control at least 80 percent of the market. In a 10-year period, we have seen Wall Street speculation double on the energy futures market.

What does this mean in terms of oil prices? Everything in the world. The function of Wall Street speculation has nothing to do with using oil, everything to do with making a profit, driving prices higher. This is not just Bernie Sanders talking. There is now a growing consensus that excessive speculation on the oil futures market is driving up oil prices. 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 and many other groups--the Consumer Federation of America--have all agreed that excessive oil speculation significantly increases oil and gas prices.

Interestingly enough, Goldman Sachs--not one of my favorite institutions but 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. Goldman Sachs, speculator, they themselves estimating that excessive speculation is costing 56 cents a gallon at the pump for the average consumer, and that may be a conservative estimate.

A few years ago the CEO of ExxonMobil, again not one of my favorite companies, testified at a Senate hearing that excessive speculation contributed as much as 40 percent to the cost of a barrel of oil.

Saudi Arabia, the largest exporter of oil in the world, told the Bush administration back in 2008 during the last major spike in oil prices that speculation has contributed as much as 40 percent to a barrel of oil.

Gary Gensler, the chairman of the CFTC, has stated publicly that oil speculators now control between 80 to 87 percent of the energy futures market, a figure that has more than doubled over the past decade. In other words, the vast majority of oil on the futures market is not controlled by people who actually use the product but people whose only function in life being in the oil futures market is to make as much quick profit as they possibly can.

Let me give just a list of a few of the oil speculators and how much oil they were trading on June 30, 2008, when the price of oil was over $140 a barrel and gas prices were over $4 a gallon. 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, Merrill Lynch, et cetera.

What we have to understand is that to a very significant degree, pricing of oil has nothing to do with supply and demand, nothing to do with end users who actually buy the product, and everything to do with Wall Street speculation. Sadly, the spike in oil and gasoline prices was totally avoidable. The Dodd-Frank Wall Street Reform and Consumer Protection Act required the Commodity Futures Trading Commission to impose strict limits on the amount of oil that Wall Street speculators could trade in the energy futures market by January 17, 2011, 2 1/2 years ago.

Unfortunately, the CFTC has been unable to implement position limits due to opposition on Wall Street and a ruling of the DC district court which is now under appeal.

This amendment directs the CFTC to utilize all its authority, including its emergency powers, to curb excessive oil speculation within 30 days. We are not going to drag this on for another 5 years. The emergency directive in this amendment is virtually identical to bipartisan legislation that overwhelmingly passed the House of Representatives by a vote of 402 to 19, during a similar crisis in 2008.

Let me conclude by saying that millions of consumers are hurting as a result of excessive speculation. People are paying much more at the pump than they should for gasoline. This issue impacts our entire economy. It is time that we did something to that. I say to my colleagues: I call up amendments numbers 963 and 964, and ask for their immediate consideration.

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