WASHINGTON -- Exxon Mobil Chairman and CEO Rex Tillerson said Thursday that heavy Wall Street trading has driven up the price of oil well beyond the level that normal supply and demand forces would suggest.
Under questioning from Sen. Maria Cantwell (D-Wash.) during a Senate Finance Committee hearing, the Exxon chief said that if oil prices were being dictated by normal economic forces, it would cost between $60 and $70 a barrel. Oil is currently trading just below $100 a barrel and has fallen sharply in recent weeks after soaring for most of the year.
"If you were to use a pure economic approach . . . It's pretty hard to judge, but it would be, when we look at it, it's gonna be somewhere in the $60 to $70 range," Tillerson said.
Several economists have expressed concerns that speculation may be driving up the prices of oil and food. The Commodity Futures Trading Commission, which regulates such activity, says that the number of speculative bets on oil is at an all-time high.
During last year's Wall Street reform bill debate, Cantwell was the top Congressional proponent of reining in the $600 trillion derivatives market, which currently allows traders to place bets on everything from subprime mortgages to the price of corn without either regulatory oversight or market scrutiny.
Last year's legislation required the CFTC to write new rules cracking down on excessive speculation in the oil and food markets, but the regulator has been slow to act, despite Commissioner Bart Chilton's urging. On Wednesday, Cantwell joined 14 Senate Democrats and Sens. Olympia Snowe (R-Maine) and Bernie Sanders (I-Vt.) in signing a letter asking the agency to curb excessive speculation as soon as possible.
House Republicans, meanwhile, are pushing legislation that would bar the CFTC from implementing any new derivatives rules before the end of 2012.
Watch Cantwell's exchange with Tillerson below: