Clarke Dryden Camper is Senior Vice President, Head of Government Affairs and Public Advocacy at NYSE Euronext, a...
Congressional Democrats fired off a letter to CFTC Chairman Gary Gensler and four other commissioners demanding the agency “immediately enact strong position limits to eliminate excessive oil speculation” as required under Dodd-Frank. The 68 members of the House and Senate harshly criticized the CFTC for “continu[ing] to drag its feet on imposing strict speculation limits to eliminate, prevent, or diminish excessive oil speculation,” which they argued is at least partly responsible for the rise in gasoline prices from $1.90 per gallon three years ago to $3.70 today.
In the letter, Democrats wrote that curbing speculation in the oil and gas markets is one of the CFTC’s “primary duties,” perhaps even its “most important” duty in order to “ensure that the prices Americans pay for gasoline and heating oil are fair.” Under Dodd-Frank, regulations on speculative position limits were supposed to be in force by January 17, 2011. Democrats argue that the initial position limits adopted by the CFTC are “not strong enough” and have been held up by “industry opposition, delays in swaps oversight and data collection” – a situation they called “simply unacceptable.” Waiting for swap rules to trigger all position limits is “simply not adequate to protect consumers.”
Quoting a Goldman Sachs study reported in Forbes, Democrats argued that excessive speculation forces consumers to pay an additional $0.56 at the pump for each gallon of gas. While gasoline prices have risen significantly, “the demand for oil in the U.S. is at its lowest level since April of 1997,” suggesting that prices do not reflect “the fundamentals of supply and demand.”
"We have a responsibility to ensure that the price of oil is no longer allowed to be driven up by the same Wall Street speculators who caused the devastating recession that working families are now experiencing,” congressional Democrats wrote. “That means that the CFTC must do what the law mandates and end excessive oil speculation once and for all.”