Dems: Fully fund trading watchdog to curb oil-market speculation

More than 100 Democrats urged House appropriators Friday to fully fund the Commodity Futures Trading Commission (CFTC), arguing the agency’s work is necessary to curb excessive market speculation that they say is driving up oil and gasoline prices.

Without adequate resources, the CFTC may not be able to implement rules established under the 2010 financial reform law that require limits on speculative trading in energy futures markets, the House Democrats said.

The law mandates “position limits” on the amount of futures and swaps contracts for oil and other commodities that traders may hold. The limits will curb speculation and help to rein in volatile oil and gasoline prices, they said.

“We must ensure that speculators are not taking advantage of the heightened volatility in the markets to reap unjustified profits,” the lawmakers wrote in a letter to the heads of the House Appropriations panel charged with funding the agency.

The lawmakers pointed to fears that tension in Iran and other countries in the region could lead to oil supply losses. The fears have contributed to the recent spike in oil prices, they noted.

Rep. Edward Markey (D-Mass.), the top Democrat on the House Natural Resources Committee and the letter's organizer, said the CFTC should be funded at $308 million for fiscal 2013, the amount recommended by President Obama in his budget request.

“We must ensure that the CFTC has the resources it needs to effectively implement these regulations that are critical to protecting American consumers from higher prices,” the letter stated.

Democrats have ramped up pressure on the CFTC to implement the rules amid soaring gas prices, which reached a national average of about $3.89 per gallon Friday, according to AAA.

A coalition of Democrats, 23 senators and 45 House members, urged the CFTC earlier this month to limit excessive speculation in oil markets.

And a handful of liberal senators, lead by Sen. Bernie Sanders (I-Vt.), unveiled legislation this week that would force the CFTC to use its emergency powers to put limits on speculative trading.

But Republicans have dismissed Democrats’ calls for reeling in speculation, arguing that the administration instead needs to open up more federal land for drilling and approve the Keystone XL oil pipeline.

Energy experts say federal policymakers have little control over gas prices because they are tethered to oil prices, which are set on world markets. Even a dramatic expansion of domestic oil-and-gas leasing would have little short-term impact on the price of gas, they say.