WASHINGTON - A House bill that delays federal regulation of oil speculators will force Americans to pay higher gasoline prices than they need to, Rep. Collin Peterson of Minnesota said Wednesday.
"There is no justification for this," Peterson said at a press conference outside the U.S. Capitol. He called a Republican bill that forbids regulation of commodities speculators until after Dec. 31, 2012 "dangerous."
Peterson cited a study by Goldman Sachs investment bank that said market manipulation adds $27 to the price of a barrel of crude oil and costs consumers 33 cents per gallon at the gas pump.
Sean Cota, the president of the Petroleum Marketers Association of America and a heating oil and propane gas dealer, called the Goldman estimate "dramatically low." The production cost of crude oil is $45 a barrel. But the cost of crude opened at $103 a barrel Wednesday. Without regulation, he predicted an oil price bubble that could be more devastating than a 2008 spike when crude oil prices shot up to roughly $140 a barrel.
CME Group, an association representing exchanges that trade commodity futures, has said the current spike in oil prices can be explained by market fundamentals, not futures trading.
The Republican-controlled House likely will pass the bill delaying regulation. The Democrat-controlled Senate likely will not. Peterson described the regulations on futures trading as one of the most important pieces of financial reform passed by Congress after the financial crisis of 2008.
The Commodity Futures Trading Commission (CFTC) has already missed deadlines to begin imposing the rules. For his part, Peterson would simply like to rid the commodities business of "guys who run the market up and down and make money on both sides."
Jim Spencer • 202-408-2752