By Ben Geman - 03/05/12 01:39 PM EST
Dozens of House and Senate Democrats are urging federal regulators to implement limits on speculative trading in energy futures markets that the lawmakers call a major factor behind the run-up in gasoline prices.
A letter Monday to the Commodity Futures Trading Commission (CFTC) from 23 senators and 45 House members underscores how gas prices have soared to the top of the political agenda on Capitol Hill and the campaign trail.
The March 5 letter to the CFTC bashes the regulators for failure to implement rules finalized last October that establish “position limits” on the amount of futures and swaps contracts for oil and other commodities that traders may hold.
The limits are required under the sweeping 2010 Wall Street reform law. “As the cost for American people to fill their gas tanks continues to skyrocket, the CFTC continues to drag its feet on imposing strict speculation limits to eliminate, prevent or diminish excessive oil speculation as required by the Dodd-Frank Act,” the letter states.
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“Although the CFTC has adopted initial position limits, they are not strong enough and not yet in force owing to industry opposition, delays in swaps oversight and data collection. This is simply unacceptable and must change,” it states.
House and Senate Democrats are increasingly citing Wall Street speculation to counter GOP election-season political attacks over gas prices.
Republicans, amid the recent run-up, have upped calls for a major expansion of offshore oil-and-gas leasing, opening the Arctic National Wildlife Refuge to oil development, approval of the Keystone XL oil sands pipeline and other steps.
Regular gasoline prices are now averaging $3.77 per gallon nationwide, compared to $3.48 a month ago and $3.50 at this time last year, according to AAA.
The Democrats’ new letter makes the case that prices at the pump are far above what supply-and-demand fundamentals should dictate.
From the letter:
According to the Energy Information Administration, the supply of oil and gasoline is higher today than it was three years ago, when the national average price for a gallon of gasoline was just $1.90. And, while the national average price of gasoline is now over $3.70 a gallon, the demand for oil in the U.S. is at its lowest level since April of 1997. Nor is the global supply of oil at issue. According to the International Energy Agency, in the last quarter of 2011 the world oil supply rose by 1.3 million barrels per day while demand only increased by 0.7 million barrels per day. Yet, during this same period, the price of Texas light sweet crude rose by over 12%. Meanwhile, oil speculators now control over 80 percent of the energy futures market, a figure that has more than doubled over the past decade.
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