Letter to Mark Wetjen, Chairman of the Commodity Futures Trading Commission and Scott O'Malia, Commissioner of the Commodity Futures Trading Commission, and Bart Chilton, Commissioner of the Commodity Futures Trading Commission - Oil and Gas Market Speculation

Letter

Dear Chairman Wetjen and Commissioners Chilton and O'Malia,

For too long, American businesses and consumers have suffered as a result of excessive speculation in commodities markets, especially for critical products such as gasoline, home heating oil, propane, and natural gas. As you know, Congress tasked the Commodity Futures Trading Commission (CFTC) to prevent excessive speculation in these commodities markets by establishing hard position limits. Unfortunately, the speculation rule has been held up over the last several years, which has allowed speculators to continue driving up the price or increasing the price volatility of these important commodities. Now that the comment period on the rule has come to a close, we write today to ask that you swiftly exercise your authority and restore order to energy and other commodity markets.

While the supply of oil in the United States has increased significantly in recent years, the current average price of gasoline is almost two times higher than it was five years ago. It is clear that market fundamentals do not explain the current price of oil. In 2010, Goldman Sachs reported that speculation contributes $23 to the price of a barrel of oil, which means that American families are paying an extra 56 cents for each gallon of gas at the pump.

For American consumers already struggling to make ends meet, higher gasoline and other energy prices have become a serious restriction on purchasing power. In addition, high energy prices result in lower margins for small businesses. In some regions, recent price increases in the natural gas market have been particularly challenging for businesses that rely on natural gas for power generation, putting pressure on their ability to maintain their operations through a cold winter season.

The Commission's newly proposed rules to curb excessive speculation through position limits on commodity speculators is an important step toward relieving this pressure and preserving jobs for American families and small businesses. We urge the Commission to act quickly and decisively to approve a final rule to help address volatile energy prices that fail to reflect market supply and demand, and restore public confidence in today's energy markets.