[Congressional Record Volume 157, Number 86 (Wednesday, June 15, 2011)]
[Senate]
[Pages S3821-S3822]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SANDERS (for himself, Mr. Nelson of Florida, Mr. 
        Blumenthal, Mr. Merkley, Mr. Franken, and Mr. Whitehouse):
  S. 1200. A bill to require the Chairman of the Commodity Futures 
Trading Commission to impose unilaterally position limits and margin 
requirements to eliminate excessive oil speculation, and to take other 
actions to ensure that the price of crude oil, gasoline, diesel fuel, 
jet fuel, and heating oil accurately reflects the fundamentals of 
supply and demand, to remain in effect until the date on which the 
Commission establishes position limits to diminish, eliminate, or 
prevent excessive speculation as required by title VII of the Dodd-
Frank Wall Street Reform and Consumer Protection Act, and for other 
purposes; to the Committee on Agriculture, Nutrition, and Forestry.
  Mr. SANDERS. Mr. President, I think every American understands that 
the very high price of oil and gas is having a very negative impact on 
our fragile economic recovery. Also, in rural States, such as Vermont, 
Montana, and other rural States, it is wreaking real hardship on 
working people who in many cases drive long distances to work. In 
Vermont certainly, it is not uncommon for people to be driving 50 miles 
to their job and 50 miles back. When the price of gas gets to be $3.80 
a gallon or $4 a gallon, it really hurts. When wages are stagnant, when 
many people have seen a decline in their paychecks, high gas prices 
have just taken another chunk out of their limited income. It is 
something that as a Congress we have to address.
  The price of oil today, while declining somewhat in recent weeks, is 
still over $97 a barrel. In Vermont, it is over $3.80 a gallon at the 
pump. The theory behind the setting of oil prices that we learned in 
high school is that oil prices are set by supply and demand. When there 
is limited supply and a lot of demand, oil prices go up. When there is 
a lot of supply and limited demand, oil prices should go down.
  So let's be clear: The fact is today there is more supply than there 
was 2 years ago, today there is less demand than there was 2 years ago; 
therefore, oil prices should be substantially lower than was the case 2 
years ago. The fact, however, is just the opposite. In Vermont today, 
gas prices are $3.80 a gallon. Two years ago, they were approximately 
$2.44 a gallon. So the explanation of supply and demand in terms of why 
oil prices have soared just does not carry any weight.
  While we cannot ignore the fact that big oil companies have been 
gouging consumers at the pump for years and have made almost $1 
trillion in profits over the past decade, there is mounting evidence 
that the increased price of gasoline and oil has nothing to do with 
supply and demand and everything to do with Wall Street speculators who 
are dominating the oil futures market and driving prices up, up, and 
up. Ten years ago, speculators only controlled about 30 percent of that 
market. Today, Wall Street speculators control over 80 percent--over 80 
percent--of the oil futures market, and many of them will never use one 
drop of that oil. So we are not talking about airlines that use gas and 
oil. We are not talking about trucking companies. We are not talking 
about home heating companies. We are talking about speculators whose 
only function in this entire process is to make as much money as they 
can by raising prices and then selling.
  This is not just Senator Bernie Sanders making this point. Let me 
quote from a June 2 article from the Wall Street Journal:

       Wall Street is tapping a real gusher in 2011, as heightened 
     volatility and higher prices of oil and other raw materials 
     boost banks' profits . . . by 55 percent in the first 
     quarter.

  Banks' profits are soaring as a result of oil speculation. That is 
the fact. It is not just the Wall Street Journal. The CEO of 
ExxonMobil, Rex Tillerson, in response to a question at a recent Senate 
hearing, estimated that speculation was driving up the price of a 
barrel of oil by as much as 40 percent. That is the CEO of ExxonMobil. 
He might know something about that issue.
  The general counsel of Delta Airlines--a major consumer of fuel--Ben 
Hirst, and the experts at Goldman Sachs have all said that excessive 
speculation is causing oil prices to spike by 20 to 40 percent.
  Even Saudi Arabia, the largest exporter of oil in the world, told the 
Bush administration back in 2008--when the Bush administration went to 
them and said: We need to drive prices down. Produce more oil. Sell 
more oil--they said that is not the problem. Saudi Arabia said: We have 
all the oil we need. The problem is speculation. And they estimated 
that speculation could result in about $40 a barrel.
  In other words, the same Wall Street speculators who caused the worst 
financial crisis since the 1930s through their greed, recklessness, and 
illegal behavior are back at it again, and this time they are ripping 
off the American people by gambling that the price of oil

[[Page S3822]]

and gas will continue to go up and up and in that process are driving 
the price of gas and oil up and up.
  Sadly--and this is the important point--this spike in oil and 
gasoline prices was entirely avoidable. This was avoidable. The Wall 
Street Reform Act that we passed last year, the Dodd-Frank legislation, 
required--underline ``required''--the Commodity Futures Trading 
Commission to impose strict limits on the amount of oil Wall Street 
speculators could trade in the energy futures market by January 17 of 
this year.
  We passed legislation that said to the Commodity Futures Trading 
Commission: You have to impose rules by January 17 with strict limits 
on excessive oil speculation.
  Mr. President, 6 months have come and gone. They have not done what 
they were required to do.
  Almost 5 months later, the CFTC has still not imposed those 
speculation requirements. In other words, the chief regulator on oil 
speculation is clearly breaking the law and is not doing what he is 
supposed to be doing.
  Last month I held a meeting in my office with Mr. Gary Gensler, who 
is the Chairman of the CFTC, and six other Senators. I have to tell you 
that I was extremely disappointed in both the tone of that meeting and 
the complete lack of urgency at the CFTC with respect to cracking down 
on oil speculators as required by the law.
  Therefore, today I have introduced legislation, along with Senators 
Blumenthal, Merkley, Franken, Whitehouse, and Bill Nelson to end 
excessive speculation once and for all--once and for all. The American 
people cannot continue to be ripped off by Wall Street which is 
artificially driving up the price of oil and gas.
  I am very pleased to also announce that Congressman Maurice Hinchey 
will be introducing this legislation in the House. This legislation 
mandates that the Chairman of the CFTC take immediate action to 
eliminate excessive oil speculation within 2 weeks--2 weeks.
  One. Our bill requires the Chairman to establish speculative oil 
position limits equal to the position accountability levels that have 
been in place at the New York Mercantile Exchange since 2001.
  Two. This bill requires the Chairman of the CFTC to double the margin 
requirements on speculative oil trading so that Wall Street investment 
banks back their bets with real capital.
  Three. Under this bill, Goldman Sachs, Morgan Stanley, and other Wall 
Street investment banks engaged in proprietary oil trading would be 
classified as speculators instead of bona fide hedgers.
  Four. The Chairman of the CFTC would be required under this bill to 
take any other action necessary to eliminate excessive speculation and 
ensure that the price of oil accurately reflects the fundamentals of 
supply and demand.
  I am pleased to announce that this legislation already has the 
support of a very diverse group of organizations representing small 
businesses, fuel dealers, consumers, workers, airlines, and farmers. 
Some of those organizations are: Americans for Financial Reform; the 
Consumer Federation of America; Delta Airlines; the Gasoline and 
Automotive Service Dealers of America; the International Brotherhood of 
Teamsters; the Main Street Alliance; the National Farmers Union; New 
England Fuel Institute; Public Citizen; and the Vermont Fuel Dealers 
Association. This is just a few.
  I want to thank all of those organizations for their support. The 
American people are sick and tired of being ripped off at the gas pump. 
People in the northern States, whether it is Vermont or Minnesota, 
worry about what the price of home heating oil will be next winter. 
What we are seeing now in terms of excessively high oil and gas prices 
has nothing to do with supply and demand and everything to do with Wall 
Street speculation.
  This Congress has told the CFTC to act. They have failed to act. Now 
is the time for us to tell them exactly what must happen.
                                 ______