Exxon CEO: Wall Street Is Driving Up Gas Prices By 50 Percent (VIDEO)

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:

Comments

[mudshark12]

12:57 AM on 05/14/2011

These effing speculators better stop it before the economy goes BAM! kerflooey kaput fubar and they turn our dollar into kindling!

[NJProgressiveIndie]

06:52 PM on 05/13/2011

Republicans and Fifth-column Democrats will do everything in their power to block any legislation that would rein-in Wall Street speculation that is driving prices at the pump through the roof. Even the Tea Party should be against speculation giving subsidies that are nothing more than welfare to an industry that doesn't need it.

Everyone else is forced to live within their means. Why can't the oil industry?

[OnTheBounce]

03:42 PM on 05/13/2011

Sen. Jay Rockefeller (D-W.Va.) statements provide insight into the Corporate American mindset, and detachment from Main Street suffering. “Congress is facing enormous pressure to make deep cuts in essential government programs, in order to reduce the budget deficit. Americans are struggling to make ends meet -- a struggle made dramatically worse by high gas prices. Meanwhile, the Big Five oil companies -- Exxon Mobil, BP, Shell, Chevron, and ConocoPhillips -- made about $34 billion in profits in the first three months of 2011, up 42 percent from a year ago.”

AMERICA HAS NOT FORGOTTEN ENRON, AND THE CALIFORNIA ENERGY RIP-OFF! AMERICA HAS NOT FORGOTTEN WALL STREET, AND THE SUB PRIME MORTGAGE RIP-OFF! Washington’s reverence of Wall Street scholarship has turned Main Street upside down.

[MikeMart]

02:16 PM on 05/13/2011

Wall Street=Demise of America.........

[joebhed]

12:10 PM on 05/13/2011

Yeah, we know that.

But the relevant question TODAY is about the relationship between oil-price speculation, oil prices and the size of the profits of these companies.

Once it is established that these two ARE closely tied together, then the question becomes whether, and why, the consumers should be lining the pockets of these corporations both at the pump and at the taxpayer window.

The answer is that they should not, and since oil price speculation remains legal (until....????), and since the taxpayer-funded subsidies to the oil companies (how much are they by the way when ALL are included?) are actually both optional and unnecessary, why should the Congress NOT rescind them completely?

Why Not ??
At least until oil price future trading is removed from present day pump-pricing.

[nothingchanges]

09:44 AM on 05/13/2011

Let's see if I understand this correctly.

Gas prices are at an all time high because President Obama is not allowing enough off shore oil rigs to be placed ........ causing a shortage, thus driving up prices to meet demand, even though our reserves are now standing at less then a three year supply (if we stopped importing).

The oil companies say that up to 50% of the price of oil is pure speculation, and addressing that issue would have the net effect of lowering prices dramatically, at no environmental cost.

"House Republicans, meanwhile, are pushing legislation that would bar the CFTC from implementing any new derivatives rules before the end of 2012"

"The single most important thing we want to achieve is for President Obama to be a one-term president."

Mitch McConnell said it, I believe it.

Looks to me like Republicans are a whole lot LESS interested in the price of gas, and it's effect on our economy, then they are in seeing this administration fail.

[Troy Peterson]

01:34 AM on 05/13/2011

It always amazes me that Republicans think Tax Breaks for the average American is "Socialism", but tax breaks for highly profitable corporations is "American".

[Peanut Santiago]

11:39 PM on 05/12/2011

Correction..........they are ALL driving up gas prices.

Wall Street
Banks
Speculators
Corporations
Governments

Everybody who is able is getting a piece of the (high gas price) pie!

[Jack Daniels Esq]

03:32 AM on 05/13/2011

Correction #2 - they are ALL driving up the price of EVERYTHING

[BigDaddyWow]

10:25 PM on 05/12/2011

Doing the math at ~400 million gallons of gas a day and a price difference of $2.50 and $4.00 that's about $600,000,000 that speculators are costing the American people. The Wallstreet ilk are just a huge drag on this country and I pray that someday we have politicians (and regulators) with the integrity to exterminate these parasites before they destroy our country for good.

[Jack Daniels Esq]

03:47 AM on 05/13/2011

The 'genius' traders are running at 12:1 - thats 12 virtual to 1 real barrel of crude

[alfrede]

10:09 PM on 05/12/2011

This story should be on the front page of every newspaper in the country.
The greed of those on Wall Street and their buddies in the Congress is just unbelievable.
Everybody in the financial world is looking for a quick buck, something for nothing, at the expense of the American consumer.
President Obama should demand that the CFTC implement the recently passed legislation immediately or the head(s) of the CFTC will be replaced.

[hewhowaits]

09:27 PM on 05/12/2011

TRUE

[anti-fascist]

09:13 PM on 05/12/2011

Last month when I paid my Federal taxes I took the amount subject to tax, multiplied it by negative 1 and put it down as a deduction , "Looked for Oil"

I received a note back- nice try, signed Dick Cheney

[jmaxcourt3490]

09:07 PM on 05/12/2011

I don't know what the % is but bet your last dollar that it comprises a lot of increase currently. I certainly hold speculators and wall street more accountable than the oil companies. Not that they ar enot in it for the profits they are a business.

[jsgaetano]

08:42 PM on 05/12/2011

But... conservatives told us the "invisible hand of the free market" will always drive down costs and provide better benefit for the consumer than Big Gubment regulation ever could.
 
What went wrong, Goopers?

[Troy Peterson]

01:25 AM on 05/13/2011

More like the invisible hand of the free market will drag down the cost as we plunge into another recession.

[NJProgressiveIndie]

06:55 PM on 05/13/2011

I'm sure it says somewhere in the fine print that the consumers who benefit are the top 1-2%.

[McKeaton]

08:23 PM on 05/12/2011

Add to the profit making the military machine , with the wars and conflicts, that pay about $100/gallon, and you'll see the big picture....may be...