Some folks use the futures market for oil as intended: to lock down a supply of oil at a specific price. Imagine, for example, that you run an airline, and you want to make sure that you have jet-fuel locked in at a reasonable price. But many folks who have no end use for oil also buy and sell it on the exchange. They are commodity gamblers, hoping to cash in on the upswing. And the resulting speculation bubble drives up the price of gas at the pump.

Indeed, the number of folks who gamble on Commodity Futures Trading Commission oil markets has gone up. In the past, transactions by folks who have no end use for oil accounted for about 30 percent of the market. Today, such gambling constitutes 66 percent of the market.


In fact, over the past few weeks, thousands of such speculators have jumped into the futures market because they hope the world tension over Iran’s nuclear program will drive a speculative price surge on which they can profit. Thus speculation, not supply and demand, is generating gambling profits for big investors and raising the price of gas at the expense of consumers filling up at the pump.

The solution is simple: Let oil end users use the oil futures market for its intended purpose while getting the gamblers out. That is exactly what Congress sought to do by empowering the CFTC to aggressively restrict participation by non-end use gamblers. The CFTC has utterly failed to effectively utilize this power. Thus, we must collectively compel the CFTC to use its new power to set “position limits” on speculators.

The bigger solution, however, is to end our addiction to foreign oil. This addiction costs America about $1 billion a day. Sending $1 billion a day overseas is a great strategy if you want to create wealth and jobs overseas. But it is a huge mistake if you want to create jobs and wealth here in America. If our goal is to create red, white, and blue American jobs here at home, then we must aggressively transition to a clean energy economy with the energy developed right here in America.

We need to take bold steps to reduce our dependence on oil. Last year, I introduced the Oil Independence for a Stronger America Act.  This bill would set into law a goal for our nation to achieve independence from overseas oil in the next 20 years, and require a specific plan for achieving that oil independence goal.

My bill includes steps to make vehicles more fuel efficient, including accelerating deployment of plug-in hybrids and fully electric vehicles. The bill also increases utilization of public transportation, increases the efficiency of freight transportation, develops alternative transportation fuels and reduces the use of oil to heat buildings. A final important element is that it creates a National Council on Energy Security within the White House to ensure sustained focus on reducing the use of oil from one presidency to the next.

We face a choice. Do we stick with our addiction to foreign oil, and remain beholden to the price shocks, financial booms and busts, and pollution it creates? Or do we start the transition to a clean energy future with energy made right here in America creating American jobs?

We have the technology and know-how. We just need the political will to make the right decisions and move America forward.

Senator Merkley (D-Ore.) is a member of the Senate HELP, Environment and Public Works, and Budget Committees.