[Congressional Record Volume 155, Number 86 (Wednesday, June 10, 2009)]
[Senate]
[Pages S6456-S6457]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SANDERS:
  S. 1225. A bill to require the Commodity Futures Trading Commission 
to take certain actions to prevent the manipulation of energy markets, 
and for other purposes; to the Committee on Agriculture, Nutrition, and 
Forestry.
  Mr. SANDERS. Madam President, I rise today to introduce the Energy 
Market Manipulation Prevention Act.
  Did you know we are in the midst of the worse economic crisis since 
the Great Depression? Millions of our fellow Americans are losing their 
homes, losing their jobs, losing their life savings, losing the ability 
to send their kids to college and, in many ways, they are losing the 
hope that their own children will have a brighter future and a better 
life than they have had. It is a very unusual moment in the history of 
our country.
  In the midst of all of this concern and decline in the standards of 
living of millions of Americans, the last thing that our country needs 
right now is to see our people be ripped off at the gas pump this 
summer because of the speculators on Wall Street. Some of the very same 
people who caused this recession and have received the largest taxpayer 
bailout in American history are allowed to jack up oil prices through 
price manipulation and outright fraud.
  This is obviously not only an issue for the moment for millions and 
millions of people who drive to work every day, but for truckers and 
farmers and all people who are dependent upon gas; and it is also an 
issue for many parts of our country, such as Vermont, where a lot of 
our people heat with oil. We are not going to sit around idly and watch 
the price of oil artificially rise so that elderly people who heat with 
oil are unable to adequately heat their homes in the wintertime.
  Unfortunately, this artificial increase in oil and gas prices is 
exactly what is happening now, as it occurred similarly last summer, 
when the price of oil hit $147 a barrel. The price of gas at the pump 
was over $4 a gallon, and truckers paid more than $5 a gallon for 
diesel fuel. That is where we were last summer, and we are heading back 
there right now, unless Congress moves in an aggressive way to say no 
to speculation on oil futures.
  As you know, the price of oil is supposed to be based on the 
fundamentals of supply and demand, not by excessive speculation. What 
all of us learned in economics 101 is that if there is limited supply 
and a lot of demand, the price of the product goes up. If there is a 
lot of supply and limited demand, the price goes down. That is one of 
the basic tenets of free market capitalism.
  But interestingly, last month, crude oil inventories in the United 
States were at their highest level on record, while demand for oil in 
the United States dropped to its lowest level in more than a decade. In 
other words, there was a record amount of supply and less demand than 
we have seen over the last 10 years. Further, the International Energy 
Agency recently predicted that global demand for oil will drop this 
year to its lowest level since 1981.
  What is going on? Demand is going down, supply is high, and what the 
fundamentals of economic theory tell us is that gas and oil prices will 
go down. But as everybody who fills up their gas tank today 
understands, that is certainly not the case, because gas and oil prices 
are going up.
  Despite the record supply of oil and reduced demand, prices are going 
up, not down. In fact, the national average price of gasoline has 
jumped from $1.64 a gallon late last year to over $2.60 today. Crude 
oil prices recently reached a 7-month high.
  The American people have a right to ask why is this happening, in 
contradiction to the basic economic process of supply and demand, and 
we have a right and the obligation to act to protect those consumers. 
The increased prices that millions of motorists are currently seeing 
have caused severe financial hardship for American families, truckers, 
small businesses, airlines, and farmers. It is putting enormous strain 
on an economy already in the throes of a deep recession.
  We passed the stimulus package in order to create millions of jobs, 
in order to put money into the hands of working people, many of whom 
had lost their jobs. And now what we are seeing, as a result of this 
artificial increase in the price of gas and oil, is that those tax 
breaks we gave to working families are going not into the local 
economy, they are going right back to Wall Street and speculation, and 
they are going to the oil companies.
  All of us have a responsibility to do everything we can to lower oil 
and gas prices immediately, so that they reflect supply and demand 
fundamentals, not excessive speculation. Therefore, the legislation I 
am introducing today will require the Commodities Futures Trading 
Commission to use its emergency powers to prevent the manipulation of 
oil prices and empower the CFTC with new authority to prohibit 
excessive speculation in the oil market.
  Last July, the House of Representatives passed similar legislation by 
a vote of 402 to 19--widely bipartisan.

[[Page S6457]]

But that legislation, unfortunately, did not become law. In addition, 
this legislation would also require the CFTC to, No. 1, immediately 
classify all bank holding companies and hedge funds engaged in energy 
futures trading as noncommercial participants and subject them to 
strict position limits.
  No. 2, this legislation would eliminate the conflict of interest that 
arises when a firm, a large Wall Street financial institution, has 
employees under one umbrella responsible for predicting the future 
price of oil--the so-called analysts--while the same company controls 
physical oil assets and trading energy derivatives.
  No. 3, this legislation would immediately revoke all staff no-action 
letters for foreign boards of trade that have established trading 
terminals in the United States for the purpose of trading U.S. 
commodities to U.S. investors.
  I am delighted that Bart Chilton, one of the commissioners at the 
U.S. Commodity Futures Trading Commission, has supported this 
legislation.
  Madam President, I ask unanimous consent that his letter to me be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Dear Senator Sanders: Thank you for taking the time out of 
     your busy schedule to meet with me and Elizabeth Ritter 
     regarding energy trading and needed regulatory reforms of our 
     nation's commodities laws, rules and regulations. I 
     appreciate your leadership in this area and look forward to 
     working with you.
       I did want to make a comment about your specific efforts. I 
     commend you for your leadership in bringing transparency and 
     accountability to U.S. energy markets. As you know, the 
     Commodity Exchange Act provides the CFTC with broad emergency 
     authority to take action, in its discretion, in order to 
     maintain or restore orderly trading. In your proposed 
     legislation, you have identified critically important areas 
     of concern--excessive speculation in energy commodities, 
     classification of bank holding companies and limits on their 
     energy trading, hedge fund registration, classification and 
     trading limits, conflicts of interest by entities that both 
     trade and advise in the energy arena, and foreign market 
     access. I wholeheartedly agree with you that the time to act 
     on these issues is now, and the CFTC should aggressively 
     utilize all available authorities as appropriate, including 
     but not limited to emergency authority as currently defined 
     in the CEA, to address these pressing issues.
       Thank you again for your efforts on behalf of American 
     consumers and taxpayers, and I look forward to working with 
     you in the future on these important issues.

           Sincerely,
                                                     Bart Chilton.
  Mr. SANDERS. Let me briefly quote from the letter.
  He says:

       As you know, the Commodity Exchange Act provides the CFTC 
     with broad emergency authority to take action, in its 
     discretion, in order to maintain or restore orderly trading. 
     In your proposed legislation, you have identified critically 
     important areas of concern--excessive speculation in energy 
     commodities, classification of bank holding companies and 
     limits on their energy trading, hedge fund registration, 
     classification and trading limits, conflicts of interest by 
     entities that both trade and advise in the energy arena, and 
     foreign market access. I wholeheartedly agree with you that 
     the time to act on these issues is now, and the CFTC should 
     aggressively utilize all available authorities as 
     appropriate, including but not limited to emergency authority 
     as currently defined in the CEA, to address these pressing 
     issues.

  Madam President, I thank the Commissioner for his support of this 
legislation.
  On May 28, I wrote to Gary Gensler, the new Chairman of the CFTC, 
urging him to undertake many of these initiatives. Last week, in my 
office, I discussed this issue with Mr. Gensler. He indicated that he 
has instructed his staff to give him a list of all of the options 
available to the CFTC to respond to these concerns. While I appreciate 
Mr. Gensler's efforts on this issue, I hope this legislation will spur 
the CFTC to take immediate action to lower oil prices.
  The bottom line is, right now, at a time when unemployment is 
soaring, when the middle class is struggling to keep its head above 
water, the prices at the gas pump are soaring, and we worry about what 
oil prices in the northern parts of our country will be in the 
wintertime, there is very strong evidence to suggest that what we are 
talking about is not supply and demand but excessive speculation on the 
part of Wall Street in terms of pushing up oil futures.
  This Congress must act to protect the middle class and working people 
of this country, the consumers of this country. It is time for us to 
demand that the CFTC take the action that is necessary.
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