[Congressional Record Volume 155, Number 92 (Thursday, June 18, 2009)]
[Senate]
[Pages S6758-S6759]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           RISING GAS PRICES

  Mr. NELSON of Florida. Madam President, while we debate the Tourism 
Promotion Act, we are remiss to not mention the fact that as we are 
going into this travel and tourism season of summer, what is happening 
with gas prices. Gas prices have risen for the last 50 days. It has 
been the longest record streak of rises, dating back to 1996. The 
national average of gas has gone from $1.61 a year ago to more than 
$2.67 a gallon today. Crude oil is now over $70 a barrel. It has 
doubled in the last 4 months. How soon we forget the lessons we learned 
a year ago during last summer. In the runup of the oil and gas prices, 
it wasn't the result of the fundamental concepts of supply and demand. 
It is largely runup due to excessive and unchecked speculators on 
unregulated commodities futures markets, running up the price of oil as 
they speculate buying and selling.
  It is a fact that across America, we are using less gas. According to 
the Energy Information Administration, demand for petroleum products in 
this country is lower today than it was 10 years ago. According to the 
EIA, the supply of petroleum products is higher than it was in 1982. So 
we wonder why. If this isn't being caused by supply and demand, which 
it isn't, but gas prices keep going up, what is happening?
  There is going to be an amendment on this bill offered by Senator 
Sanders. I ask unanimous consent to be

[[Page S6759]]

added as a cosponsor of amendment No. 1330.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. NELSON of Florida. That amendment is identical to legislation 
passed in the House of Representatives by a whopping vote of 402 to 19. 
It will put the brakes on excessive speculation in the oil markets. The 
bill directs the Commodities Futures Trading Commission to use its 
existing authority, including its emergency powers, to immediately curb 
the role of excessive speculation in any market it regulates and to 
eliminate excessive speculation, price distortion, sudden or 
unreasonable fluctuations, or unwarranted changes in prices.
  We wonder how does this occur. It occurs because as people get into 
the marketplace wanting to protect against the future rise of the price 
of a barrel of oil, they buy a contract to lock in a certain price for 
that oil to be delivered in the future. Naturally, a business that 
would want to do that would be, for example, the airlines. If they 
think the price of oil is going up, they want to get in and buy a 
supply of that petroleum at the price now before it goes up. What 
happens is, when these commodities exchanges were unregulated by the 
Enron loophole in December of 2000, there is no regulatory authority by 
these exchanges.
  So, for example, they could not require a certain amount to pay down, 
if you are going to buy that futures contract. And if you don't have to 
pay anything down, then there is no skin in the game of just continuing 
to buy and bid up the price. Or, for example, they could require that 
you had to buy those contracts because you had a reasonable expectation 
you were going to use that in the future, like an airline company. But, 
no, what happens is, if you don't have to have that reasonable 
expectation, the people who want to get in and ride that price up--in 
other words, the speculators, such as the condo flippers who buy a 
condo because the rise in price is going to occur and will flip the 
contract for the purchase of the condominium without ever having to 
close. It is the same concept of speculation.
  We should note this does not apply only to the markets the 
Commodities Futures Trading Commission does regulate. There are still 
dark markets beyond the regulators' control. There is respectful debate 
amongst some in the Senate over the reach of the provision we passed in 
the farm bill last year that gave the Commodities Futures Trading 
Commission the oversight over unregulated trading of large oil 
contracts.
  We have to go further. I recently learned that the commission, the 
CFTC, is now utilizing its new authority for the first time. I believe 
what we have to do is to give them additional tools to go further than 
just discretionary oversight and that they should be able to regulate 
all energy trades.
  In addition to the Sanders amendment, ultimately, I wish the Senate 
would consider a bill I have filed that would simply turn the clock 
back to December of 2000 when the Enron loophole was passed, before 
these sweeping changes were made that allowed rampant and excessive 
speculation in the energy markets.

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