NEWS RELEASE:
Congress Plans Action on Oil Market Speculation As Consumers Send Their Gas Bills to Legislators, White House
New Legislation Aims at Taming Energy Markets; Consumer Watchdog Decries Likely Lack of Senate, White House Support
CONTACT: Judy Dugan, 310-392-0522, ext. 305; or cell, 213-280-0175
June 23, 2008
Santa Monica, CA — U.S. Gasoline prices and crude oil markets were
stuck near record highs again Monday as Consumer Watchdog continued a
campaign to have consumers send their gasoline bills to Congress to
spur action.
Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer
Rights) applauded the House of Representatives today for planning
concrete steps to quell oil market speculation, which some members of
Congress have urged for six years without success.
The nonprofit, nonpartisan Consumer Watchdog also urged drivers to sign
an online letter that tells legislators and the White House what their
last fill-up cost them and what gas prices are doing to the family
budget. The letter calls for energy trading rules to bring down the
price of crude oil and gasoline. (See the letter and announcement here.)
“Consumers get the idea that stopping market speculation is the one
thing that could bring consumers and the economy relief this year, not
10 years down the road,” said Judy Dugan, research director of Consumer
Watchdog. “Their personal gas bills give a dose of real life to
lawmakers who have taxpayer-funded vehicles or large expense allowances
that shield them from pain at the pump.”
Even some hedge fund managers now believe that speculation, not market
forces, drives the price of oil, as do a growing number of independent
analysts, said Consumer Watchdog. Michael Masters of the Masters
Capital Management fund predicted Monday that better regulation of
energy trading could cut crude oil prices in half within 30 days of
enactment, “and gas prices would reflect that.” (See CNN story with full quote here.)
There are at least nine proposed bills aimed at regulating trading
markets, chiefly by adding a dose of regulation to completely
unregulated portions of the market, and by increasing the amount of
money speculators have to put down to take part in trading. One mild
bill to close what’s called the “Enron Loophole” in energy trading was
passed into law this month, but putting it in force now depends on the
White House, which has not supported such regulation.
“Some of the proposals in the House will certainly pass, but a Senate
filibuster threat or a White House veto would stop them cold,” said
Dugan. “When such simple, effective solutions as fair energy market
rules get stopped by politics, the political process has lost all touch
with the people back home.”
Consumer Watchdog and OilWatchdog.org have called for:
– White House action to sell some of the Strategic Petroleum Reserve,
which contains the highest-demand, most expensive oil known as light,
sweet crude.
– Closing the Enron Loophole in commodity trading regulation. A
regulatory measure has been passed, overcoming a White House veto, as
part of the federal farm bill. (See S.2058 by Democratic Senators Dianne Feinstein & Carl Levin.) Now it is up to a hostile White House to put the law into action. (See more on Enron Loophole and farm bill amendment here.)
– Increase in margin funds that traders must put up in energy markets
to help suppress speculation. Currently, traders only have to put up 5%
to 7% of the worth of the purchase, instead of the 50% required on
stock trading. This makes it cheap to speculate.
– Senate approval of an alternative fuels bill funded by withdrawing
$1.8 billion a year in unjustified taxpayer subsidies to oil companies.
This measure, passed by the House, was not taken up in the Senate,
where opponents used a filibuster tactic to require 60 votes for
passage. A similar House measure was removed from the federal energy
bill by the Senate last year under pressure from the oil lobby. (Find text of HR 5351 here.)
– Oversight of refinery operations, including regulation of national
gasoline supplies. In the last decade, the average on-hand supply of
gasoline has dropped from 30 days’ worth to about 22 days. This makes
prices increasingly sensitive to any cuts in production. Only
government regulation to control the supply of gasoline, nationally and
regionally, will keep supplies adequate to control prices.
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