Taking the Cop Off the Oil Speculation Beat
As an oil front group tours the country trying to convince Americans that oil companies aren’t responsible for high gas prices, House Republicans are celebrating the one-year anniversary of Rep. Joe Barton’s (R-TX) apology to BP (coming up this Friday!) by going to bat for the Wall Street speculators and oil traders that are artificially driving up the price of oil (and gas). Here’s a rundown of the action unfolding.
WHO: House Republicans
WHAT: A bill on the House floor that will slash next year’s funding for the Commodity Futures Trading Commission — the federal regulator that oversees speculators in oil and other commodities — by a whopping 44 percent below what the president requested. This is also 15 percent less than what the agency got this year, even as the CFTC is preparing to take on the enhanced powers and responsibilities granted to it in under the Dodd-Frank Wall Street reform bill.
WHEN: The House started considering the Agriculture Appropriations bill (which includes funding for the CFTC) this afternoon and is expected to finish voting on amendments and move to final passage sometime tomorrow. This will be the third time this year, following earlier votes in February and April, that House Republicans will vote to effectively cripple the CFTC by denying it the funds it needs to do its job.
WHY IT MATTERS: Instead of addressing the rampant oil speculation that everyone from oil companies (Exxon) to commodities traders (Goldman Sachs) to the head of the CFTC (Gary Gensler) agrees is driving up prices, Republicans are slashing the budget for the only agency that can crack down on excessive speculation. In essence, by voting to take the cop off the oil speculation beat, the GOP is guaranteeing that speculators will have free rein to keep driving up prices.
Republicans also continue to vote to maintain billions of dollars in wasteful and unnecessary taxpayer-funded subsidies for oil companies, even as the GOP refuses to drop its plan to end Medicare and its presidential contenders call for trillions of dollars more in tax cuts for the wealthy and corporations.
WHO BENEFITS: In addition to the speculators themselves, thanks to high oil and gasoline prices driven higher by speculators, the Big Five oil companies — BP, Chevron, ConocoPhilips, ExxonMobil, and Shell — made $32 billion in profits during the first quarter of 2011. Incidentally, the oil and gas industry gave over $16 million to Republicans during the last election cycle — more than three times what it gave to Democrats.
Fast Facts on How Oil Speculation is Pushing Up Gas Prices:
- The world’s largest commodity trader, Goldman Sachs, recently admitted that speculation was to blame for high oil prices, telling its clients that it believed speculators like itself had artificially driven the price of oil as much as $27 higher than supply and demand dictate.
- 67.5 cents: The estimated increase in gasoline price per gallon due to speculation.
- ExxonMobil CEO Rex Tillerson admitted earlier this month that, according to traditional supply and demand, oil should cost about $60 or $70 per barrel.
- Oil speculators have doubled their share of oil futures markets since the 1990s, with a ratio of 68 percent speculators to 32 percent users of oil, according to a recent McClatchy report.
- Nearly 90 percent of oil traders betting on rising prices are speculators, while about 12 percent of these bets were “held by producers, merchants, processors and users of the commodity”
BONUS FACT: Modern oil derivatives were invented by none other than Koch Industries — the same oil conglomerate that is helping to bankroll Americans for Prosperity’s “Don’t blame the oil companies for high gas prices” tour and has relentlessly pushed for further market deregulation.
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News You Can Use: Commodities Trading Expert Explains Oil Speculation & Gas Prices
2012 Watch: Recapping Last Night’s Republican Presidential Debate
In yesterday’s Progress Report, we proposed specific questions for the candidates. Of the seven questions we put forth, five were asked, and the other two (both about the GOP’s plan to end Medicare) also came up in some form. We’ve updated yesterday’s Progress Report with the relevant portions of the debate transcript.
The main takeaway from last night’s debate is that the GOP continues to view tax cuts for the wealthy and corporations as basically the only solution to any and all problems in our country — tax cuts they would pay for by ending Medicare, cutting Medicaid, slashing Social Security, and raising taxes on the middle class. Here are some other posts about last night’s action that are worth checking out:
**Please Note: The entire ThinkProgress & Progress Report team will be heading to the annual Netroots Nation conference tomorrow through the weekend, so your next Progress Report will land in your inbox on Monday. If you happen to be attending, please don’t hesitate to find us in panels or at other events and say hello!**