So far all efforts to curb speculative trading in the oil futures market have run into partisan opposition or are hung up in the courts. Democrats in the U.S. Senate have sponsored several bills to put limits on how much oil can be held by any trader for the purposes of buying and selling to profit from price fluctuations. Senator Mark Begich is a co-sponsor and enthusiastic supporter of that legislation. He says speculators are running the price of crude oil up far beyond what would result from simple supply and demand.
The bills are going nowhere, however, because they don’t have bi-partisan support. They have become politically entangled with other oil and gas issues, particularly the Obama administration’s push to end federal tax subsidies for the oil companies, which is adamantly opposed by Republicans.
Additionally, such a law already exists. Two years ago, in the Dodd-Frank Act, Congress directed the Commodity Futures Trading Commission to enact what they call “position limits” on how many oil contracts traders can hold on to. But the regulation the Commission passed to do that was immediately challenged by the industry in court. That case is still pending.
Senator Begich says everywhere he goes in the state, people are urging him to take action to curb high fuel prices. This morning on the public radio call-in show “Talk of Alaska,” he said the situation is probably the same for other lawmakers during their holiday trips back home.
Begich is among a group of Democratic Senators who have involved themselves in the legal case over the CFTC’s “position limit” regulation, filing an amicus brief spelling out their intention to get speculators out of the business of trading in oil futures.
The speculation issue has not always been so partisan. Back in 2008, with the price of crude oil approaching $140, Republican Senator Ted Stevens introduced a bi-partisan bill to limit positions held by certain types of investors. He said in five years, the amount of crude oil futures held by market index funds had skyrocketed. The bill was never passed.
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