Senator Majority Leader Harry Reid has introduced legislation (S.3268) that he claims will reduce gas prices by focusing solely on market speculation.  Reid and Senate Democrats assert that the recent rise in gasoline prices has occurred largely because “greedy speculators” are driving up prices.

 

“It's not speculation, it's supply and demand.  We don't have excess capacity in the world anymore, and   that's what you're seeing in oil prices.”  -- Warren Buffet, Chairman & CEO, Berkshire Hathaway, 6/25/08

 

“There is little evidence that large investment flows into the futures market are causing an imbalance between supply and demand, and are therefore contributing to high oil prices… Blaming speculation is an easy solution which avoids taking the necessary steps to improve supply-side access and investment or to implement measures to improve energy efficiency.” --International Energy Agency, Medium-Term Oil Market Report, July 2008

 

“If financial speculation were pushing all prices above the level consistent with the fundamentals of supply and demand, we would expect inventories of crude oil and petroleum products to increase as supply rose and demand fell. But, in fact, available data on oil inventories shows notable declines over the past year.” -- Ben Bernanke, Chairman of the Federal Reserve, 7/15/2008

 

“There is speculation, but speculation, under most circumstances, is a positive thing.  It provides liquidity and allows people to hedge their risks.  And it provides price discovery.  It can help allocate oil availability over time, depending on the pattern of futures prices and so on. – Ben Bernanke, Chairman of the Federal Reserve, 7/15/2008

 

“The rise in oil prices can be explained by basic economic factors, such as limited growth in supplies in recent years, a weakening dollar, a global surge in energy demand and a string of production disruptions in countries like Nigeria,” – Daniel Yergin, Chairman, Cambridge Energy Research Associaties

“The truth is that increased speculation in oil futures is not a cause of rising oil prices, but rather an effect of those prices, which have skyrocketed due to growth in global demand, geopolitical instability, and constricted supply in several producing countries. John Chapman, Researcher at the American Enterprise Institute, 7/16/2008

“If Congress is literally going over the CFTC's head and talking about imposing legislation or making the CFTC exercise its emergency powers to limit excess speculation when they don't even know what that means. I don't even know what excess speculation means,” -- Michael Haigh, senior commodity analyst at Societe Generale Corporate and Investment Banking and former associate chief economist with the CFTC, 6/30/2008

“There's no evidence of speculative influence. Speculators are not contributing to the demand for physical oil as they almost always roll positions prior to delivery,” -- Craig Pirrong, professor of finance at the University of Houston, member, CFTC energy markets advisory committee, 6/24/08

“On any given day, expectations determine the price; but the spot market also has to clear, and the way this happens is that excess supply must be added to physical stocks. Even with fairly inelastic supply and demand, any large speculative deviation from the “fundamental” price should show up in a noticeable increase in inventories.”  -- Paul Krugman, New York Times columnist, 6/28/08