(Hartford, CT) – Senator Richard Blumenthal today strengthened his call for measures aimed at lowering gas prices for Connecticut residents in remarks to business and community leaders at the Meriden Chamber of Commerce.
Blumenthal urged today a broader federal investigation into abusive anti-consumer illegality – broadening the investigation to include refineries as well as excessive speculation and market manipulation that has led to artificially high prices. He also renewed his calls for legislators to give the Department of Justice authority to crack down on foreign oil cartels, and a release of product from the Strategic Petroleum Reserve (SPR).
“Slight but sharp changes in prices at the pump are hard proof that high gas prices have less to do with supply and demand and more to do with record amounts of speculation in the market,” said Blumenthal. “Price drops have been too small, and now is the time to get serious about curbing excessive speculation. While small business owners are working hard to create jobs, their progress is stifled by high gas prices. Further economic recovery is jeopardized by traders and hedge funds gaming the oil markets.”
Last week, the Commodities Futures Trading Commissions brought a law suit against two traders who are accused of manipulating the market by purchasing millions of barrels of oil to drive up prices in 2008.
“Keeping the pressure on the speculators means using all of the tools at our disposal, including legal action,” said Blumenthal. “We must send a message to bad actors operating in our markets that taking advantage of hard working families in Connecticut and around the country will not be tolerated.”
Currently, nearly 70 percent of all contracts for oil futures are controlled by speculators. These speculators do not ever take control of the oil, but instead resell the futures for a profit. Experts have pointed to the radical shift in prices during the month of May as proof of excessive speculation. During one day in May, prices shifted $5 – which experts contend cannot be a result of a change in supply or demand.
According to news reports, there is a healthy amount of supply for the market and a stable amount of demand, meaning that spikes in prices must come from artificial actors like speculators. Additionally, U.S. oil production has risen to 5.5 million bpd this year from 4.95 bpd in 2008.