Sen. Bernie Sanders, I – Vt., announced today that he will introduce a bill which will force an end to large banks’ speculation on oil prices, and end he says is already overdue. Sanders also condemned the Ryan Plan as a “horrendous Republican budget.” Oil futures speculation, he said, is the reason Vermonters, and all Americans, are paying so much at the pump.
Citing the Wall Street Reform Act, Sanders said it “required the Commodity Futures Trading Commission to impose strict limits on the amount of oil that Wall Street speculators could trade in the energy futures market by January 17 of this year.” Limits still have not been implemented.
His announcement came on the same day, he noted, as a Wall Street Journal article called “Big Banks Cash In on Commodities.” The story touches on the big first quarter numbers being reported across the commodities market by large banks, specifically J.P. Morgan. The company earned $750 million in commodities in the first quarter of 2011, a steep increase from the $514 million earned in all of 2010. As the article noted, these numbers are not confirmed by J.P. Morgan, who doesn’t make them publicly available, but were reported by a firm called Coalition, which “analyzes the performance of investment banks.”
The bill could be seen as an imposition on the free market, and Republicans may oppose the bill on those grounds, but Sanders said that the market isn’t free now, and that his bill would help.
“When you have more supply today, and less demand [and oil prices are higher], tell me how that’s free market,” Sanders said. “That is the very opposite of free market.”
“But don’t take my word for it,” Sanders continued. He pointed out the testimony of Exxon Mobil CEO Rex Tillerson, who testified before a Senate committee that excessive speculation is causing a 20 to 40 percent spike in oil prices. A 20 percent spike, Sanders said, “translates into about 70 cents a gallon at the pump.”
Exxon Mobil’s first quarter profits in 2011 were $10.65 billion, up $4.35 billion from last year.
When asked how his bill differs from the Wall Street Reform Act in terms of efficacy, Sanders said its language was much more targeted at speculation than the broader stroke of the Wall Street Reform Act. “It’s going to be very specific,” he said. “In other words, if this bill is passed, speculation will end, period.”
In addition to introducing the new legislation next week, Sanders has also written President Barack Obama about the issue. Sanders wrote, “It is now April 28, 2011, and the CFTC has still not imposed limits on oil trading in direct violation of both the letter and the spirit of the Wall Street reform law.”
Sanders calls on Obama to “ask for the immediate resignation of any CTFC commissioner who refuses to obey the law and nominate someone who will.”
Sen. Sanders also voiced his strong opposition to the Ryan Plan, a budget proposal by Rep. Paul Ryan, R-Wisc., which calls for tax cuts for wealthy Americans, funding cuts to many social programs including Medicare, Medicaid. Sanders said the budget, which would go into effect for fiscal year 2012, will not pass.
“The President would veto it tomorrow,” he said, “the democrats in the Senate will never accept it.”
Sanders, the only U.S. Senator registered as Independent, said he won’t accept it either.
“It is not just community services; it is not just education and Pell Grants; it is not just environmental protection; it is virtually every program that you can think of,” Sanders said of cuts made by Rep. Paul Ryan’s plan. Ryan’s plan also calls for tax cuts to people in the highest income bracket.
Sanders said this was unacceptable.
“You don’t destroy Medicare, make huge cuts in Medicaid and education, and then say to the richest people in this country, ‘Hey, we’re going to give you more tax breaks,’” he said.