Senators Continue To Debate Energy Price Speculation v. Supply

Jul 22: Democratic Senators Byron Dorgan (D-ND) and Amy Klobuchar (D-MN) held a press conference with energy experts to discuss the Stop Excessive Energy Speculation Act (S. 3268), which they said "will stop greedy energy traders who artificially inflate oil prices and ensure Americans pay a fair price at the pump." Republicans, generally disagree, saying speculation is only a small factor and opening up new oil and gas drilling areas is more important [See WIMS 7/21/08]. The Senate began debate on the bill on July 21 and voted overwhelmingly 94-0 to continue debate on the bill today (July 22).

Dorgan said, “The price of gas and oil continues to shoot up like a Roman candle. It has become abundantly clear that speculators, not the laws of supply and demand, are driving up prices. This legislation will cut out the rampant speculation that is happening in the oil futures market.” Klobuchar, noting that the price of gas has gone up $1 in just the past six months said, “The experts tell us that a good amount of the money we now pay at the pump is going into the bank accounts of financial speculators, when I was a prosecutor we had a saying: ‘Follow the money and you’ll find the bad guy.’ If we’re going to protect American consumers and businesses, we need to follow the money and stop the speculators.’’

On July 17, Senator Pete Domenici's (R-NM), Ranking Member of the Senate Energy and Natural Resources Committee, office issued a release saying that energy market experts disagree with Democrats about the market speculation issue. A number of experts cited in the Republican release indicated that generally high energy prices are not the result of speculation, but rather a factor of supply and demand. On July 21, Senate Minority Leader Mitch McConnell (R-KY) issued a release saying, "The Majority Leader has moved to a bill that only addresses the issue of speculation. But no serious person thinks passing this legislation alone will fix the problem. I don’t know of any reputable economists who think that simply addressing the futures market will significantly affect the price of gas. . . Strengthening regulation of the futures market is a worthwhile piece of any legislative effort, but let’s be clear from the outset: it’s just a piece -- and a small piece at that."

Sherri Cabrera, Director of Legislative Affairs for the Petroleum Marketers Association of America said, “Petroleum marketers want to be able to respond to the needs of their customers to provide affordable gas and diesel, and heating oil dealers desperately need to be able to provide affordable heating oil to their customers. Reducing speculation is something that can be done immediately. Other solutions are important, but long term. Petroleum marketers are focused on reducing prices now. If S. 3268 is not enacted, not only will the economy continue to suffer, but this extreme energy crisis could well cost human lives this winter. Gas station owners and heating fuel retailers are fighting to lower fuel prices by urging Senators to pass S. 3268. Consumers who want lower gas prices should also tell their Senators to pass S. 3268.”

McConnell said, ". . . gas prices will not go down unless supply goes up. . . They [Democrats generally] need to unlock the Outer Continental Shelf and lift their ban on the development of the vast oil shale deposits in western states. . . So far, a dozen Democrats have expressed some level of openness to new domestic exploration. We are approaching a bipartisan consensus on the need to increase domestic supply. But their leadership isn’t there. Their presidential nominee opposes every effort to increase supply. The Speaker of the House is walking in lock-step with Al Gore." On July 21, Senator Domenici said he would introduce an amendment to S. 3268 that would seek to lift the moratorium on deep sea exploration.

As the Senate began its debate on S. 3268, Senate Majority Leader Harry Reid (D-NV) turned the tables and said, "Democrats have made it clear that we support more domestic production. That is certainly part of the answer. But it’s only one part. . . He outlined the Democratic strategy in four parts saying, "First – we end the billions of dollars in tax breaks for big oil companies whose executives have been hauling record profits while we pay record prices. Second – we force the oil companies to do their part by investing some of their profits in clean and affordable alternative energy. Third – we protect the American people from price gougers and greedy oil traders who manipulate the market. And fourth – we stand up to OPEC and countries who are colluding together to keep oil prices sky-high."

Senator Reid said, "We have offered Republicans a chance to vote on not just speculation, but the issue they’ve talked about for weeks: allowing state governors to decide on offshore drilling. We have made it clear that we are willing to compromise and work together on energy legislation that both sides can live with. They can offer their drilling amendment, and we would offer our own alternative. Both measures would receive a vote. That is how the legislative process is supposed to work. This latest Republican obstruction tactic has left us with no choice but to file cloture to proceed to our speculation bill. . . By forcing us to file cloture, Republicans are wasting precious time when prompt action is desperately needed. Perhaps during these 30 hours we must now spend on cloture, Republicans will decide to vote on speculation and vote on drilling. The American people will certainly be waiting to see whether Republicans are willing to take yes for an answer – and legislate on the energy crisis."

Access a release from Senate Democrats (click here). Access a release from Senator McConnell (click here). Access the floor speech from Majority Leader Reid (click here). Access the Senate Republicans website for links to many releases, statements and videos on the debate (click here). Access the Senate Democrats website for links to information on the debate (click here). Access legislative details for S. 3268 which includes links to all Congressional actions and the floor statements (click here). [*Energy]