Amid the seemingly inexorable rise in gasoline prices, a Democratic senator is demanding federal regulators launch an investigation to ensure skyrocketing prices at the gas pump are not the result of excessive speculation or market manipulation.
Sen. Maria Cantwell of Washington released a breakdown of public data showing that excessive oil speculation costs Spokane, Wash., drivers $8 to $16 per tank. This “speculative premium” costs drivers up to 64 cents per gallon, Cantwell says.
The price consumers pay at the gasoline pump nationwide has risen sharply in recent weeks. Concern is mounting that the increasing amount consumers are forced to pay to fuel their vehicles could damage the U.S. economic recovery.
Gas prices in Spokane have gone up 65 cents-per-gallon in just the last two months, Cantwell’s office says in a statement. Diesel prices are a dollar more per gallon over this time last year, hitting truckers, farmers, and transit services particularly hard, the statement adds. A family of four can expect to pay $337 more to drive this summer than last.
“Spokane drivers are paying at the pump for excessive oil speculation, while federal regulators have failed to act,” Cantwell says. “I pushed to make sure last year’s historic financial reform bill included a way to crack down on excessive speculation, but federal regulators have yet to meet their new responsibilities and Wall Street and big oil lobbyists are jamming up the implementation process. In light of the 65-cents-per-gallon gas price spike in Spokane over the past two months, I am calling on federal regulators to use these new tools to protect families and businesses across the country.”
According to a new data set released Sunday by Cantwell and Commodity Futures Trading Commission (CFTC) Commissioner Bart Chilton, Honda Civic drivers are paying $8.35 per gas tank due to excessive speculation; Ford Explorer drivers are paying $14.45 more per tank; and Ford F150 drivers, the most popular pick-up, are paying $16.69 more per fill up.
Last month, Cantwell urged the CFTC to crack down on oil speculation that is likely contributing to recent gas prices spikes. In a letter to CFTC Chairman Gary Gensler, Cantwell and 11 other senators urged him to use the new authority granted in last year’s Wall Street reform law to combat excessive speculation. Commodities experts have said that oil speculators are driving up the cost of oil in the wake of news from the Middle East. CFTC Commissioner Chilton responded with a letter confirming that the latest data shows speculative positions in the energy sector are at an all-time high –- up 64 percent from June 2008.
Also last month, Cantwell sent a bipartisan letter to the Federal Trade Commission (FTC) calling for an investigation into any links between rising gas prices and a sharp increase in wholesale oil markets. In August 2009, the FTC finalized its Petroleum Market Manipulation Rule, which was promulgated in compliance with legislation Cantwell authored in 2005 and successfully shepherded into law in 2007, making it a crime to manipulate wholesale oil markets. She is now calling on the consumer protection agency to use its new authority to meet their responsibility to protect consumers.
In the letter sent last month to the FTC, Cantwell noted that the price per barrel of oil over the past four years has varied drastically despite comparatively little change to the world’s supply and demand. She asserts that the FTC must be more proactive and aggressive in enforcing its market manipulation rule, noting the success the Federal Energy Regulatory Commission (FERC) has had in ferreting out bad actors in the electricity and natural gas markets using identical authority, and she details several questions she wants answered to shed light on any illegal activity that is behind the pain at the pump.
She continues: “The high gas prices that are hurting American families and businesses today represent the first major test of FTC’s ability to protect consumers in this market. We urge you to use the authority of the Petroleum Market Manipulation Rule aggressively in order to protect consumers from unnecessarily high and volatile gas and diesel prices.”
Sen. Jay Rockefeller (D-W.Va.), chairman of the Senate Commerce, Science, and Transportation Committee which has jurisdiction over the FTC, also signed Cantwell’s letter. Sens. Olympia Snowe (R-Maine), Ron Wyden (D-Ore.) and Mark Pryor (D-Ark.) signed on as well.
Scott Nance is the editor and publisher of the news site The Washington Current. He has covered Congress and the federal government for more than a decade.