May 25, 2011

Wyden, Cantwell Call Out CFTC for Dragging Their Feet on Preventing Excessive Oil Speculation

Washington, D.C. – As gasoline continues to hover at $4 per gallon propelled by rampant speculation in the oil commodities market that now amounts to nearly 40 percent of all trades in crude oil futures markets, U.S. Senator Ron Wyden (D-Ore.) joined Senator Maria Cantwell (D-Wash.) on the Senate floor today to excoriate the Commodities Futures Trading Commission’s (CFTC) decision not to take immediate action to impose position limits to curb excessive oil speculation.

Speaking on the Senate floor, Wyden said that “the American people and our economy cannot afford to pay the hundreds of millions dollars a month in additional fuel prices that will come out of their wallets while waiting for the CFTC to act.

“The fact of the matter is that 40% of the oil futures market is now dominated by financial speculators, it’s way past time for the CFTC to act to tamp down excess speculation and its impact on higher prices.”

Wyden and Cantwell led a bipartisan group of Senators in a letter calling on the CFTC to impose position limits on the commodities market that will prevent speculators from driving up the price of oil. Oil trading on the commodities market is dominated by two very different groups – those who use the market to lock in prices on oil that is legitimately used to run their businesses and those without practical uses for oil who make money simply by buying and selling oil futures on the market. These speculators cause the price of oil to fluctuate wildly and have made a large contribution to the increased oil prices seen over the last few years.

What the bipartisan group of senators is proposing is for the CFTC to quickly use their authority to set limits on how much of the oil futures market any one speculator can hold at any one time. This will limit the ability of speculators to cause the price of oil to fluctuate and, far more often than not, rise substantially. In a letter to the senators, the CFTC has refused to act to speed up the rulemaking process, allowing for speculators to continue to dramatically impact the oil market unchecked.