Casey Calls on CFTC To Immediately Finish Rule and Limit Speculation In Oil Market
Washington DC- U.S. Senator Bob Casey (D-PA) today called on the Commodity Futures Trading Commission (CFTC) to end nearly 2 years of delay and finalize a rule that would limit speculation in the oil market. With prices at the pump approaching record highs, Casey wrote a letter to CFTC Chairman Gary Gensler calling on the agency to finalize its rule and protect consumers from inflated gas prices.
“Consumers shouldn’t be forced to pay higher prices at the pump because of speculative bets on Wall Street,” Casey said. “Nearly two years ago Congress gave the CFTC the tools to crackdown on speculation in the oil market, and with sky high prices at the pump it’s time they used it.”
In July 2010, Congress passed the Wall Street Reform and Consumer Protection Act. The bill gave the CFTC the authority to limit the ability of speculators on Wall Street to inflate the price of oil by putting in place position limits. The position limits set the maximum amount of the oil market that a single speculator could control. Nearly two years after the bill became law, the CFTC has yet to finalize the rule which limits speculation in the oil market, leaving consumers susceptible to price spikes driven by Wall Street speculators.
In his letter Casey wrote, “Implementing the CFTC’s position limits rule is an important first step in curbing the role that oil speculation has played in driving up prices. Increased oil prices pose a serious threat to the ongoing recovery of our economy. Increased prices also create an immediate hardship for families across Pennsylvania and the Nation as a whole.”
The full text of Casey’s letter to the CFTC can be seen below:
The Honorable Gary Gensler
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
Dear Mr. Gensler:
I write regarding the promulgation of regulations aimed at curtailing oil speculation in the United States. For years, consumers have confronted higher prices at the pump because of speculative bets placed by Wall Street in the futures markets. I urge the Community Futures Trading Commission (CFTC) to move quickly to finish its pending rules to limit these market-distorting practices.
The Dodd-Frank Act included a provision specifically geared to crack down on this type of speculation. I understand that the CFTC has finalized a rule creating position limits for certain physical commodities, including oil. However, I understand that implementation of this rule is being held up for a number of reasons, including determining of the definition of the term “swap.” As I said in my letter to you in August 2011, the complex nature of derivatives regulations under the Dodd-Frank Act makes it essential that regulations be promulgated in a logical sequence. The definitions of basic terms such as “swap” are crucial to a whole range of derivative-related regulations that have been published by the CFTC, including position limits on oil and other commodities. I encourage you to do everything in your power to finalize these definitions so that these rules can take effect.
Finalizing this definition is critical to American consumers. The U.S. has seen a significant spike in oil prices recently. Data published by the U.S. Energy Information Administration makes it clear that this increase cannot be explained by supply and demand in the oil market. Over the last year, U.S. consumption of liquid fuels fell by almost two percent, with consumption of gasoline falling by almost three percent. Over the same time period, U.S. production of oil continued to grow. Despite rising supply and falling demand, oil prices in the U.S. have risen dramatically, with speculation likely playing a significant factor.
Implementing the CFTC’s position limits rule is an important first step in curbing the role that oil speculation has played in driving up prices. Increased oil prices pose a serious threat to the ongoing recovery of our economy. Increased prices also create an immediate hardship for families across Pennsylvania and the Nation as a whole. I urge you to implement position limits as soon as possible.
Thank you for your attention to this request.
Robert P. Casey, Jr.
United States Senator