Stop Excessive Energy Speculation Act of 2008--Motion to Proceed

Floor Speech

STOP EXCESSIVE ENERGY SPECULATION ACT OF 2008--MOTION TO PROCEED -- (Senate - July 23, 2008)

BREAK IN TRANSCRIPT

Ms. KLOBUCHAR. Mr. President, it is now Wednesday, and we have been debating the issue of speculation for several days. I believe it is time to stop talking and it is time to vote to end speculation in the oil marketplace.

There is an honest debate going on about our long-term energy policy--one I am glad we are having. We need to talk about the potential of expanding our domestic production and about new refineries. I live next door to North Dakota, and I see their potential with the oil shale. Certainly, as T. Boone Pickens has been doing over the last few weeks, we need to lead the way with wind, solar, and to put the focus on hybrid and electric cars, biofuels, as we have seen in Minnesota. We have seen a revival in our rural areas with wind. We are third in the Nation with wind. We have seen it with biodiesel, biofuels.

I have seen firsthand the potential for this next energy revolution. It is my belief that we should be investing in the farmers and workers of the Midwest and not the oil cartels of the Mideast. So I welcome this debate, and I hope we can get something done on that.

Let's look at the short-run. What are the American people facing now with $4-per-gallon gasoline? Right now, they don't have the time or the patience for us to tell them we are not going to get anything done on speculation even though almost every Senator in this Chamber has admitted there are problems with speculation and that it is part of the problem. We may differ on how much of a problem it is, but we know it is part of the problem.

I believe our Stop Excessive Energy Speculation Act will help to pop the oil speculation bubble. This bill has a number of provisions that will fight the kind of excessive speculation that drives up energy prices for hard-working American families.

This bill will close the so-called London loophole. It will stop traders from routing transactions through offshore markets to get around limits on speculation put in place by U.S. regulators. The Intercontinental Exchange, or ICE, allows trading on American oil futures, gasoline, and home heating oil with far less stringent reporting requirements than we have here at home. I can tell you that my constituents--it is not great to tell them: Don't worry, Dubai or London will be taking care of you. They don't buy that, and they don't buy it for a good reason. The way the world has worked now with the loopholes that have existed, like the Enron loophole--and I see Senator Feinstein, who worked to close that loophole to the point where we can better regulate our energy future. We know there is more we can do, and that is what this bill contains.

This bill will make foreign trades in American oil and gasoline futures subject to the same reporting requirements as trades made here at home, so we can stop a glut of overseas trades from driving up our energy prices.

This bill would also require the CFTC to review the letters of ``no action'' that it issued to the ICE electronic exchange in Atlanta, and the Dubai electronic exchange, which operates in cooperation with NYMEX in New York. With these ``no action'' letters, the CFTC gave these exchanges permission to operate in this country and trade in American energy futures with no oversight from U.S. regulators. Personally, I don't believe it is good enough to say that the Dubai Financial Services Authority is looking out for people in my State. We need to let speculators know that if they want to trade in American energy futures, they are going to be subject to American regulation.

The bill would also convene an international working group of financial market regulators to develop uniform reporting and regulatory standards in the major trading centers in the world to put an end to the problem of speculators shopping around for the country with the weakest regulations. The world has changed. One of our jobs in the Senate is not to just put our heads in the sand and pretend the world hasn't changed. It has. The laws must change with it.

This bill would also require the CFTC to impose position limits on speculators who trade in energy futures but don't actually produce energy or receive physical deliveries of energy commodities. If you are an investor who buys and sells oil futures but you don't plan to ever take delivery of actual barrels of oil, this bill will limit how much you can buy and sell so that you won't be distorting prices for your own personal gain. We know some limits are in place right now in American laws, and this is to cover the situation we see going on in the world today.

Last, this bill is going to give the CFTC the funding authority to hire at least 100 full-time employees so the Commission can strengthen its regulations and improve its enforcement over the energy derivative market. As a former prosecutor, I know--I have seen it before--you can pass all the laws you want, but if you don't have the cops on the front line enforcing the law, you will not be able to get the job done. I heard the head of the CFTC testify before the Agriculture Committee. I was surprised. As a prosecutor, I said: Give me all the tools I need, because you want to have the tools. That is what this bill does.

We have heard from the other side of the aisle that speculation is not a major contributor to high oil prices. It is hard to imagine such a position, but our friends on the other side seem intent on finding some straw to hang on to that just doesn't work. They are literally living in an evidence-free zone. Look at what has happened. Oil prices are up 25 percent. Gasoline is up 25 percent in 6 months; it is around $4. We know demand hasn't gone up 25 percent. Have we seen some increase in worldwide demand? Yes, but demand in the United States is down. It is nowhere near 25 percent, though.

We know something is going on. It is our job to adjust our laws and give the agency that enforces these laws the funding it needs to do its job. We saw this happen with the Consumer Product Safety Commission. Exports went way up, millions of exports; at the same time, the agency became a shadow of its former self. It is no surprise that we suddenly had little foam toys, which were supposed to inflate in water, morph into date-rape drugs. We had a little boy in Minneapolis die because he swallowed something from a toy that was 99 percent lead.

You have the same thing going on here. It is this Congress which has to step in and say: Let's get the agency the resources it needs to do its job. When oil prices jump $16 in 2 days without any events to drive them up, we cannot say speculation isn't having an impact. When the 12th largest private company in the United States is filing for bankruptcy after losing billions in oil trading, we cannot say speculation isn't having an impact. Even Walter Lukken, the Acting Chairman of the CFTC, has stated that oil markets are ``ripe for those wanting to illegally manipulate the markets.'' We had an expert testify before Congress that speculation in the oil market is the biggest gambling hall in America. We had CEOs saying it should be trading at $55 or $60 a barrel. Do you know who is taking a hit? It is Americans across the country. They are taking a hit every time they go to fill up their gas tanks.

There is no excuse for this Congress not to act on speculation. We are listening to the people of this country, and we are hearing that this bill--Majority Leader Reid's bill--makes common sense to everyday Americans.

Groups across the country that deal with high gas prices every day have come out in support of our efforts to stop the out-of-control speculation going on in the oil market. These groups include the National Farmers Union, the Teamsters, the Air Transportation Association, the Consumers for Competitive Choice, Northwest, and the American Feed Industry Association. And the airlines in Minnesota aren't exactly partisan organizations. They are businesses. They have seen their profits go down. They have seen their routes go down. The number of planes they can fly has gone down. They have unhappy customers. They have millions of airline customers who are writing in to do something on speculation. Speculation is where the rubber hits the runway for the airlines in this country. We must do something about it. Even the beer wholesalers want to do something about it. I talked to one of their members last night. They want to get something done. I can tell you that my friends across the aisle say speculation has little to do with this. I will use a good beer word: That is all foam and no beer.

It is time to get something done. It is time to act on speculation.

In conclusion, the cost of energy is hurting Americans from all walks of life, in businesses and every sector of our economy. We need to work hard. I have pushed, in the last year and a half, for a long-term energy policy. We need a bold energy policy to carry our Nation forward. We also need to do something now--today, not tomorrow, not next week, not in September. Let's pass this speculation bill and help the people of this country.

Mr. President, I yield the floor.

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