House Democratic leaders on Wednesday amplified their attacks on Wall Street oil traders, arguing that excessive speculation — not a lack of supply — is to blame for skyrocketing prices at the pump.
With gas prices nearing $4 per gallon nationwide, the Democrats are trying to counter Republican accusations that President Obama's energy policies are behind the rapid cost increase.
"Wall Street speculators are artificially driving up the price at the pump and causing pain to … American consumers," Pelosi charged.
Rep. Rosa DeLauro (D-Conn.), chairwoman of the policy committee, echoed that message.
"The cost of gas is … irrefutable affected by rampant speculation in the oil market," DeLauro said. "That is something that we can, and should, do something about."
The average price of regular gasoline hit $3.93 per gallon Wednesday — up almost 60 cents since the start of the year, according to AAA. Republicans have been quick to pounce, arguing that Obama's energy policies are driving the trend.
"The president now says he supports the Republican ‘all of the above’ energy strategy for our country, but for three years his administration has made every effort to block, delay, and restrict new energy production in our country," House Speaker John BoehnerJohn BoehnerLast Congress far from ‘do-nothing’ Top aide: Obama worried about impeachment for Syria actions An anti-government ideologue like Mulvaney shouldn't run OMB MORE (R-Ohio) said last month. “He claims that he wants to address rising gas prices, but his policies are actually making matters worse for families and small businesses."
The Democrats are pushing back, noting that the recession reduced domestic demand for fuel, while domestic production is up to its highest level in roughly a decade. By simple laws of supply and demand, they argue, fuel prices should be falling. That costs are spiking instead, they say, is largely the result of excessive speculation.
"Of course the Republicans would like you to think that this is all President Obama's fault and deflect any blame away from the real culprits," said Rep. Edward MarkeyEd MarkeyBuying that new-used car: Congress must put safety first Overnight Finance: Scoop – Trump team eyes dramatic spending cuts | Treasury pick survives stormy hearing Senate Dems want Trump to withdraw from Pacific trade deal MORE (Mass.), senior Democrat on the House Natural Resources Committee. "They are wrong. The current spike in gas prices is not about Obama. It's about OPEC, oil companies and Wall Street speculators."
The Democrats are pushing a handful of policy changes they say will bring down oil costs quickly and efficiently. First, they want the White House to release some of the oil the country has stockpiled for emergencies; second, they want more funding for the Commodity Futures Trading Commission (CFTC), which polices Wall Street's commodities traders; and third, they want more of the oil produced domestically to be used in the United States, rather than exported.
Appearing before the panel, Michael Greenberger, University of Maryland law professor and former head of the CFTC's division of Trading and Markets, told lawmakers bluntly that supply-and-demand issues are not the cause of the recent spike in fuel costs.
Rather, he said, Wall Street traders are driving the price up just for the sake of driving the price up.
"Gamblers, wearing Wall Street suits, have taken these markets over, are controlling the price and create investment vehicles that are designed to push the price of oil up," he said.
Because such traders are betting on future oil prices — not trading oil itself — they have profound effects on oil prices but no effect on either oil production or market liquidity, Greenberger said, dismissing the negative consequences for consumers if Congress goes after such speculators.
"It's just like saying, 'Does Las Vegas create national economic well-being?' he said. "We have a Las Vegas exponentially on steroids making bets on the upward direction of oil [prices]."
Gene Guilford, head of the Independent Connecticut Petroleum Marketers Association (ICPA), delivered a similar message.
"If you have no intention of taking or making delivery of the commodity you are trading, you shouldn't be allowed to participate in the market," he said. "Because what we're talking about here is the food that Americans buy and the energy that we rely on to run our economy."