U.S. Senator Jim Webb today joined other Members of Congress in calling for federal regulators to curb speculation in crude oil markets which has artificially pushed up gasoline prices.
In a letter to the Commodity Futures Trading Commission (CFTC), the lawmakers wrote that regulators must stop Wall Street futures traders from dominating the oil market. The commission has flouted a provision in the 2010 Wall Street reform law that required regulators to put tough new trading limits in place by Jan. 17, 2011.
"We are disappointed that, more than a year later, the commission has not fulfilled this important regulatory duty," the lawmakers wrote. "It is one of your primary duties - indeed, perhaps your most important - to ensure that the prices Americans pay for gasoline and heating oil are fair, and that the markets ... operate free from fraud, abuse, and manipulation."
Gasoline pump prices are up despite high supplies and low demand. According to the Energy Information Administration, the supply of oil and gasoline is greater today than it was three years ago, when the national average price for a gallon of gasoline was just $1.90. Today, the national average is more than $3.70 a gallon at a time when the demand for oil in the U.S. is at its lowest level since April of 1997.
There is a growing consensus that speculators are to blame. Exxon Mobil, the Saudi Arabian government, the American Trucking Association, Delta Airlines, the Petroleum Marketers Association of America and the Federal Reserve Bank of St. Louis all say excessive oil speculation significantly increases oil and gasoline prices. Citing a recent report from the investment bank Goldman Sachs, a Feb. 27, 2012, article in Forbes said excessive oil speculation adds $.56 to the price of a gallon of gas.
"As the cost for American people to fill their gas tanks continues to skyrocket, the CFTC continues to drag its feet on imposing strict speculation limits to eliminate, prevent, or diminish excessive oil speculation," the lawmakers wrote.
"We urge you to take immediate action to impose strong and meaningful position limits, and to utilize all authorities available to you to make sure that the price of oil and gasoline reflects the fundamentals of supply and demand."