The increased cost of oil and gasoline is damaging the American economy and is causing severe economic pain to millions of people, especially in rural America, who often have to drive long distances to work. Many workers are already seeing stagnant or declining wages and high gas prices are just taking another bite out of their paychecks.
People in Vermont and across the country are also worried about the high price of heating oil for the coming winter.
The price of oil, while declining somewhat in recent weeks, was still over $95 a barrel today. That's about $30 higher than it was two years ago.
The theory behind the setting of oil prices is that price is determined by the fundamentals of supply and demand. The fact of the matter is that there is more supply and less demand today than there was two years ago when gas prices averaged about $2.44 a gallon.
While we cannot ignore the fact that big oil companies have been gouging consumers at the pump for years and have made almost $1 trillion in profits over the past decade, there is mounting evidence that the increased price of gasoline has nothing to do with supply and demand and everything to do with Wall Street speculators jacking up oil and gas prices in the energy futures market.
Ten years ago, speculators only controlled about 30 percent of the oil futures market. Today, Wall Street speculators control more than 80 percent of this market, even though many of them will never use a drop of this oil. Their only function in this process is to make as much money as they can, as quickly as they can.
Don't just take it from me. Let me quote from a June 2 article in the Wall Street Journal: "Wall Street is tapping a real gusher in 2011, as heightened volatility and higher prices of oil and other raw materials boost banks' profits... by 55 percent in the first quarter."
The CEO of Exxon-Mobil, Rex Tillerson, in response to a question at a Senate hearing, estimated that speculation was driving up the price of a barrel of oil by as much as 40 percent. The general counsel of Delta Airlines, Ben Hirst, and the experts at Goldman Sachs have all said that excessive speculation is causing oil prices to spike by 20-40 percent. Even Saudi Arabia, the largest exporter of oil in the world, told the Bush Administration back in 2008, during the last major spike in oil prices, that speculation was responsible for about $40 of a barrel of oil.
In other words, the same Wall Street speculators that caused the worst financial crisis since the 1930s through their greed, recklessness, and illegal behavior are ripping off the American people again by gambling that the price of oil and gas will continue to go up, and up, and up.
Sadly, the spike in oil and gasoline prices was entirely avoidable. The Wall Street reform Act, Dodd-Frank, required the Commodity Futures Trading Commission to impose strict limits on the amount of oil that Wall Street speculators could trade in the energy futures market by January 17 of this year.
Almost five months later, the CFTC has still not imposed those speculation limits. In other words, the chief regulator on oil speculation is clearly breaking the law and is not doing what it is supposed to be doing.
Last month, six other senators and I held a meeting in my office with Gary Gensler, the Chairman of the CFTC.
Unfortunately, I was very disappointed in both the tone of the meeting and the complete lack of urgency at the CFTC with respect to cracking down on oil speculators as required by law. Therefore, today I introduced legislation with Senators Blumenthal, Merkley, Franken, Whitehouse and Bill Nelson to end excessive oil speculation once and for all. I am also pleased to announce that Congressman Maurice Hinchey will be introducing this legislation in the House.
This legislation mandates that the Chairman of the CFTC take immediate actions to eliminate excessive oil speculation within two weeks.
1) Our bill requires the Chairman of the CFTC to establish speculative oil position limits equal to the position accountability levels that have been in place at the New York Mercantile Exchange since 2001.
2) Our bill requires the Chairman of the CFTC to double the margin requirements on speculative oil trading so that Wall Street investment banks back their bets with real capital.
3) Under our bill, Goldman Sachs, Morgan Stanley, and other Wall Street investment banks engaged in proprietary oil trading would be classified as speculators, instead of bona-fide hedgers; and
4) The Chairman of the CFTC would be required under this bill to take any other action necessary to eliminate excessive speculation and ensure that the price of oil accurately reflects the fundamentals of supply and demand.
I am pleased to announce that this legislation already has the support of a diverse group of organizations representing small businesses, fuel dealers, consumers, workers, airlines, and farmers including: Americans for Financial Reform; the Consumer Federation of America; Delta Airlines; the Gasoline & Automotive Service Dealers of America; the International Brotherhood of Teamsters; the Main Street Alliance; the National Farmers Union; the New England Fuel Institute; Public Citizen; and the Vermont Fuel Dealers Association, just to name a few.
I want to thank Michael Trunzo the president & CEO of the New England Fuel Institute; Sean Cota the President and Co-Owner of Cota & Cota Oil; Robert Weissman the president of Public Citizen; and Professor Michael Greenberger from the University of Maryland School of Law for their leadership on this issue and for their hard work in building this diverse coalition to end excessive oil speculation.
The American people are hurting, especially in rural states like Vermont. We need action and we need it NOW.
Follow Sen. Bernie Sanders on Twitter: www.twitter.com/senatorsanders
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With China,India, Pakistan and many of the emergent markets growing demand 25% year over year there is an exponential growth in the demand for oil. Heap on that metric a slide in the dollar because of Bernakes quantitative easing and our vain attempt to pay off our debts in ever cheaper dollars.
Oil will rise. the huge oil wells are being depleted the new wells will be expensive miles deep below the sea. or deep in the Artic wilderness.
When Sanders can regulate markets in Dubai, London, Paris, Frankfurt, Hong Kong, Madrid, Caracas, Rio, Shanghai, Sidney etc, etc... I guess he will be king of the world. However Sanders once again is nothing more than shouting into the wind all his bluff and bluster amounts to nothing.
It is clear to me that this is a concerted effort to gradually raise the price. We should recognize that it goes in cycles - first there is a rapid rise to astonishing heights, astonishing until the public and our 'representative' take note of the public distress and threaten to take some action, It is only then that the price at the pump inexplicably begins to fall. taking the pressure off the alternative energy buzz and the congressional moves until they go away. What we don't seem to realize is that the prices never seem to fall to where they were before, not quite. The prices end up just a little higher than they were before, and ready for the next round in this game. Thanks for playing...
A gallon of gas was $.33 cents
One hour of work would have bought you 5 Gallons of Gas.
Today minimum wage is $7.25 and hour.
A gallon of gas is around $4.00.
The same hour of work will get you less than 2 gallons!
THAT IS WHAT HAS HAPPENED TO THE EARNING POWER OF THE MIDDLE CLASS.
That is where all our money goes today. And this administration, like the one before it does nothing to solve either of those problems.
Its interesting that on November 8th of 2008, seven month after Greenbergers testimony the bottom drop out of the US economy as fuel prices pushed home owners to their limits, either buy gasoline to get to work, buy food, or pay the mortgage. The next day crude price dropped to $32 a barrel, and the national average for gasoline dropped to $1.60 as speculators ran screaming for the hills.
You can be sure the CFTC there will make compromises that will leave the oil industry and speculators with lots of wiggle room. How does the saying go? Everyone has their price.
Also, T. Boone pickens has made similar statements on Meet the Press.
Oil production is up 18% and drilling is up 11%....there is definately not a supply problem and demand is down.
The really messed up thing is that over Memorial day weekend gas went down. This is contrary to supply/demand reasoning. The week after prices climbed back up.
Thats why the repubs are fighting her so hard!!!
It's the only game left to Obama IMHO and it is low hanging fruit IMHO. IF-- big "IF"-- he gets out on this talking about how it would help American families he might be seen as leading on this issue. That would be a good thing. None of the R's are talking about it, and he should be the one behind the lower prices when they happen.
I had a revelation the other day--I was watching an R interviewed and he kept at this meme of the President isn't leading. Well, "leading" according to Paul Ryan is talking about your point until you move the polls your way. I thought when we voted him in that Obama's oratory style was so awesome we were in for a real once in a century leader, but he is silent. I'd like to see him change that. he has the skill, he just needs to step up and do it
Today, on Meet the Press, Paul Gigot of the Wall Street Journal once again reiterated the myth that every dollar spent by the government takes away money from the "Free Market." This is nuts. Corporate America is sitting on a huge pile of cash.. It's government contracts for research or road building etc.that puts business to work and creates jobs. Business won't lift a figure until someone pays them to do it, and the biggest someone is government. Thus when tax rates become dangerously low economies go into the toilet.
F&F'd
Trillions of dollars of taxpayer dollars later, not much has improved except for the huge profits being made by wall street, the banks and corporate America. All of them scofflaws.
The collapse caused by wall street and the banks, the bailouts, and then more fraud and more fraud. Millions lost their homes, their jobs and their pensions. They lied and cheated and stole, and during the robo-signings they misrepresented material facts to the courts and presented false and forged documents. Fines and or settlements are not enough.
Still no one is being prosecuted. Now we have oil specultion driving up the price of everything, food, material goods and travel. And still no prosecution.
If the laws currently on the books are not being enforced what good are new ones that will also be ignored?
Untill 100s or 1000s of bankers and wall street moguls are behind bars, then passing a new law is just an exercise in futility. Enforce the laws, then add new ones and more regulation.
Until such time as they are in jails, then new laws are a waste of time. Enforce the ones already in place because failing to do so time and time again is a betrayal of our failth in leadership, justice and in this country.
All those jailed should have all their properties seized. inciples.
If Eric Holder won't do it, fire him, and get someone who will. All Obama has to do is tell him. So do it because these bandaid solutions are worthless unless enforced.
Go on the record in the house and the senate force to a vote the prosecution of crimes against the nation. Demand prosecution!
Let the American people see congress act on behalf of America instead of corporate America. This is a betrayal of the American people's faith in leadership, fairplay, a level playing field, the law, justice and in the very institutions we rely on for our well being and safety.
Armed robbery has a 30 year sentence. What wall street and the banks did endangered and in millions of cases robbed from the American people. Prosecute them now.
The failure to prosecute only means that not only does our government fail "We the people" but so doe the very laws we rely upon to protect life, limb and property.