Committee Discredits Reid's Source on Oil Speculation

Senate Majority Leader Harry Reid (D-Nev.) cited testimony on the Senate floor Tuesday to make the case that excessive market speculation has driven up oil prices by 50 percent.

But the problem is that one of the experts he cited was discredited weeks ago by a Senate subcommittee, chaired by a senior Democrat, Sen. Carl Levin (Mich.).

Sen. John Cornyn (R-Texas) took to the floor Tuesday and pressed Reid to provide his source to make that claim since "that is the first time I had heard that figure."

Reid shot back: "Mr. President, I would say to my friend, if it is the first time you have heard it, with all due respect, you have not been listening to what has been going on on the Senate floor."

Reid continued: "I am not the only one who has said it. Many people have said it. I would be happy to place in the record -- and the first person we will place in the record is somebody who was a high-ranking official with the commodity futures trading organization, where he says it is 50 percent."

Reid citied Michael Greenberger, a former trade division director at the Commodity Futures Trading Commission in saying that prices have shot up 20 percent to 50 percent because of speculation.

But Levin's Senate Subcommittee on Investigations issued an unusual June report discrediting Greenberger's testimony on oil speculation, questioning 19 statements he made on the issue before the committee last month.

Republicans crowed on Wednesday about the report as they attacked a stalled Democratic bill that would rein in speculation on oil futures.

But Democratic aides said there are numerous other experts who back up the concerns that speculation is significantly affecting prices. For instance, Reid spokesman Rodell Mollineau pointed to a comment made by economist Mark Zandi, now a senior adviser to Sen. John McCain.

"The oil market has become a financial market. And it's affected by all kinds of speculators, momentum players, people just betting on prices increasing or falling, in this case, obviously, increasing," Zandi said on PBS last month. "And so they ran in quickly and drove up the price. And that clearly has played a role. I mean, you don't see a $10 move in the price of oil without some financial speculation involved, as well."

"I think the larger question is why are the Republicans now running away from an issue that they put in their own legislation," Mollineau said. "To answer my own question, they were never serious about actually passing energy legislation -- just having an issue to campaign on."

-Manu Raju

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