Sen. Sanders: 'Excessive Speculation,' Not Supply and Demand, Responsible for High Gas Prices

Christopher Goins | March 22, 2012 | 6:51pm EDT
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Sen. Bernard Sanders, D-Vt., heads to the Senate floor for cloture votes on Thursday, Dec. 9, 2010. (AP Photo/Harry Hamburg)

( - Excessive speculation -- not the need for more oil drilling in the U.S. -- is responsible for current high gasoline prices, according to Sen. Bernie Sanders (I-Vt.).

At a news conference Wednesday to introduce a bill that would force federal regulators to eliminate speculation caused by oil futures traders on Wall Street, asked Sanders: “Senator, would you like to see more or less oil drilling in the United States?”

The Vermont independent, who caucuses with Senate Democrats, would not commit to being either for or against more oil drilling in the U.S.

“Well, it depends on the nature of the oil drilling,” Sanders said.

But he added:  “I think the point that I have made and others have made is that the issue is not supply and demand.  Right now you have more supply and less demand.  The economics that I learned in college means that when you have more supply and less demand, you know what, oil prices go down. Yet oil prices are going up.

“So right now the issue is to deal with excessive oil speculation that’s taking place in the oil futures market. I believe, we believe, that if you deal with that you will drive oil and gas prices down.”

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Sanders’ bill would require the Commodities Futures Trading Commission to invoke its emergency power to implement rules that would stop “excessive speculation” by futures traders.

“There is now growing consensus that speculation on the oils futures market is driving prices up,” Sanders said to reporters.  “That’s not just our opinion. Exxon Mobil, Goldman Sachs, the St. Louis Federal Reserve, the Saudi Arabian government, the American Trucking Association, Delta Airlines, the Petroleum Markets Association, the Consumer Federation of America -- and more and more groups -- understand.”

Sanders also said that it was not “the everyday people” who are causing the rise in price but the oil speculators “whose only function in life is to make as much money as they can speculating,” adding that they don’t use the very product they speculate on.

Sanders was joined during the news conference by Sen. Ben Cardin (D-Md.), Sen. Dick Blumenthal (D-Conn.), and by both senators from Minnesota -- Sen. Al Franken (D-Minn.), and Sen. Amy Klobuchar (D-Minn.).

Both Franken and Klobuchar said that they support oil drilling -- in neighboring North Dakota.

“I’m in favor of the drilling in North Dakota,” Franken said. “And in fact, I sent a birthday card to Sen. (John) Hoeven (R-N.D.), asking him to discover oil in Minnesota.”

Franken also said that “from a market standpoint” U.S. gas prices shouldn’t be where they are now.

“Demand is down,” he said. “The United States is producing more oil than it has in nearly a decade.”

Franken gave a head nod to market speculators who are end-users of oil, like Delta Airlines, because they have to scheduled flights months and years in advanced, he said. But for speculators who aren’t end-users and created market disruption, he favored putting limits on speculation.

“Of course they have to have a position with energy futures because they have to fly people a year from now and two years from now so they have to hedge their bets, so that if the market in oil spikes, they can fly people around,” he continued.

Sen. Klobuchar, meanwhile, said a comprehensive energy policy is absolutely necessary -- drilling alone is not enough.

“Whether it’s the drilling in North Dakota that I support, whether it is biofuels which is now 10 percent of our fuel supply, whether it is moving to more energy efficient vehicles, whether it is looking at electric cars and doing that kind of research, whether its public transportation,” she said.

“But to just say we are only moving on that side when, as Senator Sanders pointed out, even the increased supply hasn’t brought down the prices, we’d just be wrong,” she continued.

She added that the Republican support for the bill Sanders has introduced is already there, since a similar bill passed in 2008 with a vote of 402-19.

“To varying degrees people up here and the people in the Senate support moving forward on energy policy,” Klobuchar said.

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