[Congressional Record Volume 168, Number 92 (Thursday, May 26, 2022)]
[Senate]
[Pages S2727-S2728]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                 ENERGY

  Ms. CANTWELL. Mr. President, I come to the floor to talk about 
developments this week in trying to fight to make sure that American 
consumers aren't paying artificially more for gas to fill up their cars 
and trucks and take a vacation for the holiday than they should be 
paying.
  This is an important issue for everybody in the United States but 
particularly my constituents, who all throughout the State of 
Washington are paying--well, Seattle, definitely over $5, and many 
other parts of the State over $5. And if you are not paying more than 
$5 a gallon, you are paying very close to $5 a gallon. So it is 
important that Members of Congress do their job in oversight and 
policing of these markets to make sure that there is transparency; that 
is, a bright light to make sure that no one is taking advantage during 
this tight supply and artificially driving up that price for their 
benefit.
  That is why we introduced the Transportation Fuel Market Transparency 
Act that asked the Federal Trade Commission to expand on authority 
Congress already gave to them to police transportation petroleum 
markets and make sure that the trading that is done on indexes that 
have very little oversight--very little oversight--that those indexes 
have a brighter light shined on them so that we make sure consumers 
aren't being gouged because of the kinds of practices that happen.
  Well, lo and behold, just this Tuesday, the Federal Government and 
the Department of Justice and the CFTC--the Commodities Futures Trading 
Commission--basically gave a statement on the largest settlement in 
history, a civil monetary penalty and disgorgement exceeding $1.1 
billion on Glencore, one of the largest commodity trading firms.
  It is a major participant in the global, physical oil and oil 
derivatives market, and for more than a decade, it engaged in a wide-
ranging scheme to manipulate oil markets--schemes to defraud other 
market participants by manipulating the information going to financial 
markets, schemes that created artificially high benchmarks so that 
Glencore's derivatives and physical positions would settle or price at 
levels more favorable to the company.
  (Ms. CORTEZ MASTO assumed the Chair.)
  These were some of the same practices that are were uncovered during 
the Enron scheme. I know the Presiding Officer knows because she comes 
from the State of Nevada, and two of the areas most hard hit by the 
electricity crisis were the State of Washington and the State of 
Nevada. Why? Because people wanted us to continue to pay on fraudulent 
electricity pricing.
  That is why we fought, along with the Presiding Officer's predecessor 
and others, to make sure that electricity markets were properly policed 
for any kind of manipulative practices.
  I am very proud that we authored legislation after that scandal that 
really has given the Federal Energy Regulatory Commission the tools it 
needed on electricity and natural gas.
  They, to this date, since 2007, have used that authority to police 
electricity and natural gas and have had over a $1 billion of fines and 
settlements against companies and their bad practices.
  These are the same sort of practices that we are uncovering now in 
the commodities market and on oil market manipulation.
  I know my colleagues on the other side of the aisle would like to 
pretend that this issue doesn't exist. I ask them, go home and face 
your constituents and tell them you voted to do nothing--nothing--to 
bring more transparency into the gas markets that are affecting them 
today and see what their reaction is. I guarantee you they are paying 
too much at the pump, and they want to know that we are properly 
policing these markets.
  They get the dilemma that we are in, particularly given Russia and 
Ukraine. They get the issues of a changing economy coming out of COVID. 
But they are madder than heck when they read about some company that 
has been doing this practice for decades and basically making money off 
of the back of their hard earnings.
  Consumers could pay as much as $1,000 more for gas this year. They 
want to know why. This company raked in over $320 million in improper 
gains. And while some of the record settlement involved penalties for 
bribes and kickbacks in foreign countries, the company agreed to pay 
$485 million in settlements for criminal and civil investigations for 
various fuel oil prices.
  Various fuel oil products that were manipulated and impacted included 
Los Angeles and their Bunker Fuel Oil, New York Harbor Low Sulfur Fuel 
Oil, New York Harbor High Sulfur Fuel, and U.S. Gulf Coast High Sulfur 
Fuel Oil.
  I am not sure how much consumers ended up getting fleeced, but it is 
clear that at least hundreds of millions of dollars impacted these 
markets.

  And as the Presiding Officer knows, because she has been the chief 
law enforcement for her State, if you don't have a policeman on the 
beat policing these markets, more of these fraudulent activities will 
exist.
  After the derivative crisis, I also made sure that anti-manipulation 
authority went to the Commodity Futures Trading Commission. When we 
called recently to ask about their use of this authority, they told us 
they had put fines and penalties against companies at over $4.5 
billion. That was before Tuesday's announcement of clear oil market 
manipulation.
  Some of my colleagues, as we push this transparency bill through the 
Commerce Committee, said: Why, if they caught some people on Tuesday,

[[Page S2728]]

do we need to mark something up on Wednesday? Well, the issue is that 
we were talking about the futures market. As I just read, these 
companies are very adept at manipulating the futures market and the 
physical market to get their best gain. We are asking our colleagues to 
vote for transparency in the physical market of indexes traded after 
the product is refined.
  We know that there is a world oil price. We know that it is refined. 
But what we can't figure out is, after it is refined, why--particularly 
on the West Coast--is it at exorbitant rates, well over the national 
average and paying well over what we think market fundamentals 
determine?
  We saw, at a hearing that we had before the Commerce Committee, 
energy experts testify that some of these fundamentals do not make 
sense; that something else is going on in the market. So why turn down 
the opportunity for us, as a Federal Government, to get more 
transparency in these energy markets? Why would anybody want to say 
that more transparency over these indexes is not a good idea?
  Well, some of our colleagues--I am not sure, because they offered no 
substantive amendments to the legislation before us. In fact, those 
that were, what I would say, some improvements around the edges to the 
bill, we actually accepted in committee. The rest of the amendments 
offered were all about the issues and discussions of more supply, which 
were out of the jurisdiction of our committee, and I encouraged my 
colleagues to take them up on the Senate floor.
  So no substantive changes were offered to this legislation. Nobody 
objected on the basis of the idea that transparency is a bad idea. And 
yet people are holding on to an idea that they don't want to answer 
about this issue of manipulation.
  Trust me, I was shocked when I was elected to the U.S. Senate, before 
I was even sworn in, to find out that we were in an energy crisis; that 
somehow the price of electricity had gone from some of the cheapest in 
the United States to the most exorbitant price ever, 3,000 times the 
rate. I thought this couldn't possibly be a scheme. This couldn't 
possibly be something perpetrated because, obviously, we would catch 
that. Obviously, we have a policeman on the beat. Well, it turned out 
that the California market, what is called the ISO, really wasn't 
catching it, and there really was manipulation by Enron.
  Enron manipulated the supply of electricity by cooking up various 
schemes to move supply out of California to create artificial shortages 
and then drive up the price of electricity. They had traders who lied 
on the phone to people buying long-term contracts, telling them: Buy 
the long-term contract because the price is going up. And an analyst 
saying to a trader, and the trader replying back: That is not true. And 
the analyst saying: Tell them anyway. That is the kind of thing that we 
need to police.
  So I was shocked to find that one of my first tasks being a U.S. 
Senator was going to be to spend 2 years policing electricity just so 
my State and the State of Nevada would not pay on fraudulent contracts 
for more than a decade.
  I guarantee you, not only would the lights in Vegas have gone out, 
but much of the Washington economy would have been affected.
  This is so important now because these high gas prices are affecting 
every sector of transportation. It is affecting our airline economy. It 
is affecting our trucking economy. I have heard from our railroads on 
the diesel engine prices. It is affecting every part of our economy 
while we have to pay more.
  And even if it is 50 cents--as one of the witnesses testified, it may 
be as much as 50 cents a gallon that is artificially being put onto the 
consumers--why would you not want to know the answer and simply give 
the Federal Trade Commission the authority to make sure that these 
markets are properly policed for unfair and deceptive practices?
  I know my colleague who is presiding knows because we have even had 
suggestions from the Federal Energy Regulatory Commission that the 
practice is so bad among energy traders that we should consider 
legislation to ban energy traders who continue to perpetrate these 
schemes. That is right, they go from one company to another company. 
They know how the schemes work. They think it is just the price of 
doing business. Even if they get caught, they will just pay the fine, 
like Glencore is paying now.

  If you think about it, this $1.1 billion is one of the largest oil 
market manipulation cases ever. People probably aren't hearing about it 
this week because of other stories that are in the news. But trust me, 
this kind of behavior needs to be rooted out.
  So, Madam President, I hope that when my colleagues return, I hope 
that they will spend the recess asking their constituents whether they 
think there needs to be more transparency in oil markets. I will be 
very surprised if they don't say that something is going on, and we 
want to know what it is. That is because consumers have felt for a long 
time a disconnection between market fundamentals of supply and demand.
  And, yes, there have been some changes in supply as it relates to 
what we are facing on an international basis. My constituents 
understand that. But we have always been an isolated market in the 
Pacific Northwest for refineries in my State, most of the supply coming 
from Alaska. And yet we pay the highest prices in the Nation. So our 
constituents want to know why.
  My colleagues, Senator Wyden, Senator Feinstein, and I have 
prosecuted these issues. We have asked for more information and 
transparency. In both instances, when we were successful with 
electricity and natural gas, we did find behavior that needed to be 
rooted out. And here, we have proof now in this Glencore case that 
there is manipulation in oil markets. We are simply asking that, just 
don't leave it to the futures market, because if you want to give law 
enforcement, the Department of Justice, our attorneys general, others, 
the tools to root out bad behavior--even if it is 5 cents a gallon, it 
is worth fighting for. Even if it is a few cents more to uncover and 
drive down the cost, it is worth it to our constituents, who are paying 
exorbitant prices.
  Let's make sure everybody understands in a tight supply, it is a lot 
easier to do manipulation, and that is why we need to get this done 
now.
  I wish that the authority that we had given to the Federal Trade 
Commission on this issue in 2007 would have been used, but the point 
is, you actually have to have people and the information to prosecute 
these cases.
  My colleagues at the Federal Energy Regulatory Commission built such 
a unit. That unit, as I said, has been successful in monitoring 
electricity and natural gas. I hope that they will emulate what the 
Federal Energy Regulatory Commission has done.
  I am proud that the CFTC and our Attorney General, Merrick Garland, 
made this announcement on Tuesday of this unbelievable manipulation, of 
bribery, of schemes, of all of the work that goes behind the scenes for 
people to make billions of dollars of profits when we and our consumers 
are being gouged with extra prices.
  Let's find the answers. Let's do something as basic as passing a law 
about transparency on a product--petroleum--that is so critical to our 
economy.
  I yield the floor.

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