June 11, 2008
Press Release
Bush Responds to Reed-Levin Call for a New Federal Task Force to Probe Speculation in Oil and Commodities Markets
WASHINGTON, DC -- With energy prices continuing to reach record highs, U.S. Senators Jack Reed (D-RI) and Carl Levin (D-MI) today announced that the Bush Administration responded to their request to create a new federal task force to investigate whether speculators are driving up prices in energy commodity markets through manipulative or deceptive practices. Experts suggest that over 25% of the premium for petroleum products is a result of speculation and not supply and demand.
“Rhode Islanders are being forced to pay inflated gas prices at the pump. We shouldn’t allow unchecked oil traders to manipulate the market and get rich off the backs of middle class families. I hope this task force will take a good, hard look at price manipulation and distortions that have caused inflated prices for U.S. consumers,” said Reed. “The laws of supply and demand result in a market price, but those principles have been undercut by unregulated speculation. Aggressively policing that fraud and abuse by providing greater transparency will help drive down energy costs and provide relief to Rhode Islanders and Americans across the country.”
“Skyrocketing energy and food prices are causing financial pain, commercial damage, even strikes and riots in some parts of the world,” said Levin. “Energy prices are spiking every few days, without any change in supply or demand, which means speculation is a contributing factor. It is in everyone’s interest to analyze the roles being played by index funds, institutional investors, hedge funds and other speculators, and figure out how to stop excessive speculation from damaging the U.S. and world economy. I am relieved the Administration is finally acknowledging the situation by taking up the Reed-Levin suggestion to form a high-level interagency task force on commodity market speculation.”
On May 6, 2008, Reed and Levin wrote to President Bush asking him to create a new federal interagency task force comprised of officials from the U.S. Department of the Treasury, the Securities and Exchange Commission (SEC), the Commodities Future Trading Commission (CFTC), and other federal agencies to take a closer look at how the energy commodity markets are being manipulated and ferret out unscrupulous conduct in speculation.
The Interagency Task Force will include staff representatives from the Commodity Futures Trading Commission (CFTC), the Federal Reserve, the Department of the Treasury, the Securities and Exchange Commission, the Department of Energy, and the Department of Agriculture to examine investor practices, fundamental supply and demand factors, and study the role of speculators and index traders in the commodity markets.
Senator Levin is the author of the Close the Enron Loophole Act (S. 2058), and Senator Reed is a cosponsor of the bill, which requires greater transparency to protect the public from inflated energy prices and market manipulation. The “Enron loophole” allowed unregulated electronic commodities exchanges to operate with no oversight and outside of federal regulation. The Close the Enron Loophole became law on May 22nd as part of the Food, Conservation, and Energy Act of 2008 (H.R. 6124).”
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