Klobuchar Calls for a "Cop on the Beat'' to Protect Consumers from Manipulation of Oil and Gas Prices

Press Release

Klobuchar Calls for a "Cop on the Beat'' to Protect Consumers from Manipulation of Oil and Gas Prices

Proposes three steps to crack down on excessive market speculation

U.S. Senator Amy Klobuchar said today that excessive speculation in world energy markets is contributing to the unprecedented rise in oil and gas prices, and spelled out three steps to curb speculation and protect consumers and businesses.

"The experts tell us that a good amount of the money we now pay at the pump is going into the bank accounts of financial speculators,'' Klobuchar said, noting that the price of oil has nearly doubled in just one year. "When I was a prosecutor we had a saying: ‘Follow the money and you'll find the bad guy.' If we're going to protect Minnesota consumers and businesses, we need to follow the money and stop the speculators.''

Klobuchar, a member of the Senate Commerce Committee and Agriculture Committee, is a cosponsor of the "Increasing Transparency and Accountability in Oil Markets Act,'' which would give the Commodity Futures Trading Commission (CFTC) additional staff and authority to investigate and prevent excessive speculation in energy markets. The bill also would beef up the Commission's authority to supervise offshore exchanges, which traders use to avoid U.S. regulation, and it would require dealers and traders to file more detailed reports on their oil and gas transactions so that federal regulators can track unusual trading volumes.

Industry analysts have testified in Congress recently that market speculation could be adding as much as $40 per barrel to the price of oil.

Klobuchar spoke at a news conference in Minneapolis with two Minnesota business leaders who highlighted the way rising fuel costs are hurting Minnesota businesses and consumers. Charles Zelle, president of Minneapolis-based Jefferson Bus Lines, said rising fuel costs are putting a squeeze on transportation businesses and could force his company to reduce service to communities in the Upper Midwest. Vern Kelley, owner of Kelley Fuels in Shakopee, supplies gasoline to a number of gas stations and private companies across Minnesota. Kelley is also a member of the Executive Board of the Petroleum Marketers Association of America, which has called on Congress to intensify federal regulation of energy markets and crack down on speculators.

"We recognize the critical importance of intercity bus transportation to the citizens of the many communities we serve,'' said Zelle. "Unfortunately, the increase in fuel costs has affected our business in a dramatic way. We attempted to hedge our exposure to fuel costs, however short-term unpredictability and volatility in the price of fuel torpedoed our plan.''

"I want to personally thank Senator Klobuchar for her aggressive approach to the issue of excessive speculation by ‘paper traders' in the oil market,'' Kelley said. "I truly believe that without a successful conclusion to limiting the trading volume of the institutional investor, the sky is the limit on what our petroleum products will cost in the future. Our American economy will suffer and many companies will fail.''

In addition to cosponsoring the CFTC legislation, Klobuchar has written to U.S. Attorney General Michael Mukasey, calling for the creation of an Oil and Gas Fraud Task Force at the Department of Justice. In the wake of the Enron scandal, the Department established a special Corporate Fraud Task Force, which produced more than 1,000 convictions by aggressively prosecuting corporate fraud.

"You can have all the laws you want, but you won't get results without enforcement,'' Klobuchar said. "Minnesota drivers and businesses can't afford these energy prices, and they need a cop on the beat to protect them.''

As a third step, Klobuchar has called for closing the so-called "Enron loophole,'' which exempts electronic trading of energy futures from federal regulation. The 2008 Farm Bill, recently passed by Congress, takes an important step toward closing that loophole, but Klobuchar said additional steps are necessary to give regulators the powers they need over futures trading.

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