A U.S. senator from Ohio urged a federal commission to do more to curb speculation in the crude oil market.
“It’s extremely troubling to see Wall Street continue to make things worse through its risky speculation of the oil markets,” Democratic U.S. Sen. Sherrod Brown said Wednesday during a media teleconference. “Every time there is a fire at a refinery or an outage on a pipeline or turmoil in the Middle East, every time that happens, Wall Street and the oil industry use it as an opportunity to spike prices.”
Unveiling results of a recent study, Brown noted speculation on Wall Street adds a 56 cent premium on each gallon of gasoline. He that cost is driving up fuel prices at the pump during a time of adequate supply and the lowest demand since 1997.
“For many motorists, that’s $10 or $12 per fill up and for trucks it can be $15,” Brown said.
To combat the problem, Brown encouraged the Commodity Future Trades Commission to reign in speculators.
Until now, Brown said the commission has failed to exercise its powers.
“That’s why I am once again urging the CFTC to use its full authority under the law to crack down on excessive oil speculation,” Brown said. “We cannot afford to sit idly by while Wall Street and Big Oil get richer and Ohio’s families and small business owners foot the bill.”
On Sunday, he released a letter to the CFTC, co-signed by 70 other members of congress and Senators, urging it to immediately enact strong limits of speculation to protect Ohio consumers from excessive Wall Street betting that leads to high gas prices.
Last week, at an Appropriations subcommittee hearing, Brown asked U.S. Attorney General Eric Holder about the work of the Oil and Gas Price Fraud Working Group, a task force designed to examine oil speculation. The task force was formed in April 2011, but no findings have ever been reported to the public.
Brown was joined on the media call by Bud Burle, a truck driver from Toledo, to illustrate how much of an impact soaring fuel prices have on small businesses.
“One estimate put the cost of speculation on the trucking industry at $29 billion,” Brown said. “Higher fuel costs get passed down the production line and make the cost of everything higher.”
He is also a sponsor of the No Oil Producing and Exporting Cartels (NOPEC) Act, which would give the U.S. attorney general the authority to pursue legal action against oil-producing nations, like the Organization of the Petroleum Exporting Countries (OPEC), that band together to manipulate the price of oil, natural gas, or any petroleum product. The bill clarifies that OPEC’s activities are not protected by sovereign immunity and that the federal courts should not decline to hear such a case based on the “act of state” doctrine. This would enable the Department of Justice to take action against foreign states for colluding to set the price or limit production of oil.
In addition to curbing speculators, Brown touted the need to increase production in clean energy.
“As we go after speculators, we must also develop alternative clean energy sources and invest in more energy-efficient technologies with Ohio leading the way,” Brown said. “We must also close tax loopholes that allow Big Oil to reap billions in profits. They literally get billions of dollars a year through subsidies and tax breaks they simply shouldn’t get anymore. When the price of oil was $10 to $20 a barrel, maybe those incentives made sense — today they don’t when oil is upwards of $100 a barrel.”
Burle said the 56 cents per gallon associated with speculators amounts to a great deal every time he fills up his truck.
“On that 56 cents per gallon on one fill up, its $112.56 per fill up,” Burle said, noting his tank holds 200 gallons. “At $3 per gallon, it’s $600 for a fill up and at $5 a gallon it’s $1,000 for a fill up. That extra money means whether or not I’ll still be in business.
“The margins are so thin that the reason I am even in business now is because my truck is paid for,” he said. “If I had to have a truck payment in addition to the high cost of fuel, I wouldn’t be able to make it. There’s no way possible I could pay $5 gallon and make a truck payment and a trailer payment at still survive. It’s just not possible.”