Washington, D.C. – Rep. Raúl M. Grijalva today praised President Obama’s newly announced effort to limit financial speculation and market manipulations that drive up the cost of gasoline. Obama yesterday announced a new five-point plan that includes administrative actions and calls for Congress to pass legislation curbing illegal behavior by financial actors.
Grijalva has already been working in Congress to champion many aspects of the plan by co-sponsoring legislation and sending letters to key administration officials, including President Obama. Earlier this year, he sent a bicameral letter urging strong oversight of oil markets to Gary Gensler, the chairman of the Commodity Futures Trading Commission. A central feature of the president’s new initiative is increased funding for CFTC oversight of oil markets, as mandated by the Dodd-Frank Wall Street Reform Act of 2010.
“We cannot afford to let the four-dollar-per-gallon status quo continue, and there are easy steps we can take to fix it,” Grijalva said. “Telling taxpayers they can have free gasoline if only oil companies could drill in our national parks is incredibly dishonest. Cracking down on rampant speculation is the easiest, quickest and fairest way to make sure families can afford to get to work and Wall Street doesn’t get rich off everyone else’s difficulties.”
Grijalva is an original co-sponsor of the forthcoming Energy Markets Emergency Act, which is identical to bipartisan legislation that overwhelmingly passed the House of Representatives 402-19 during a similar crisis on June 26, 2008. That measure directed CFTC to use all the powers at its disposal to eliminate excessive speculation.
Millions of Americans, planning everything from their daily commute to summer vacations, grapple with the high cost of gasoline every day. The average price for a gallon of gasoline in Arizona is $3.88, slightly below the national average of $3.92. Gas prices have escalated despite the fact that domestic supply is higher than it was three years ago, when the national average for a price of gasoline was a $1.94.
According to the Energy Information Administration, the federal agency responsible for recording energy market statistical and analytical data, global oil supply rose by 1.3 million barrels per day during the last quarter of 2011 while demand only increased by 700,000 barrels per day.
A February 2012 article in Forbes Magazine reported that financial speculation leads to what amounts to a 56-cent premium per gallon of gasoline. Instead of addressing this unjustifiable extra cost to working families, House Republicans continue to pass legislation aimed at opening up swaths of America’s public lands and coastline to oil and gas exploration, including the Arctic National Wildlife Refuge.
The President’s Five-Part Plan:
1. Requesting Immediate Funding to Put More “Cops on the Beat” Overseeing Oil Markets: The President is calling on Congress to pass an immediate increase in funding to support at least a six-fold increase in the surveillance and enforcement staff for oil futures market trading at the CFTC.
2. Funding Critical Technology Upgrades in the Oversight and Surveillance of Energy Market Activity: The President is also requesting that Congress provide the CFTC funding for critical IT upgrades to strengthen monitoring of energy market activity.
3. Substantially Increasing Civil and Criminal Penalties for Manipulation in Key Energy Markets: The President’s proposal includes a ten-fold increase in maximum civil and criminal penalties for manipulative activity in oil futures markets. These heightened penalties will make sure that penalties reflect the seriousness of misconduct.
4. Empowering the CFTC to Raise Margin Requirements in Oil Futures Markets: The President is also calling on Congress to act immediately to give the CFTC authority to direct exchanges to raise margin requirements to address increased price volatility or prevent excessive speculation or manipulation. This authority will help limit disruptions and reduce volatility in oil markets.
5. Taking Immediate Steps to Expand Access to CFTC Data to Better Understand Trading Trends in Oil Markets: These executive actions will allow additional analysis of CFTC’s data to look for patterns and better understand trading activity in energy markets.
Learn more at http://1.usa.gov/IyZFKf.