Today the House debated the FY 2012 Agriculture Appropriations bill, which “cuts aid for low-income pregnant women and their children and slashes a key overseas food aid program by about one-third below this year’s funding.” While these drastic cuts are morally indefensible on their own, the bill also contains massive cuts to the oil speculation watchdog – the Commodities Futures Trading Commission.
While experts agree that excessive speculation in the oil markets lead to higher gas prices, Rep. Jack Kingston of Georgia, the chairman of the House Rules Committee, simply dismissed the influence, and called debate about slashing CTFC funding a “red herring”:
What I suggest to you is that the discussion of the CFTC and oil speculators is a red herring. The real issue the Democrats failed to address is drilling for oil in order to increase supply.
But speculation’s role in rising gas prices is no secret, and it’s been proven time and time again that more drilling won’t help lower gas prices. In May 2011, the CFTC charged traders for artificially driving up the price of oil in 2008, and in April of this year, Goldman Sachs, the world’s largest commodity trader admitted that speculation was to blame for high oil prices, telling its clients that speculation had added as much as $27 to the price of a barrel of oil . And during a Senate Financial Services Committee hearing, Rex Tillerson, the CEO of Exxon Mobil, said that if prices were reliant just on supply and demand, the price of a barrel of oil should be about $60 or $70 per barrel.
And while the CFTC has been tasked with cracking down on excessive commodities trading, they’ve got even more ground to cover. The CFTC released data showing that hedge funds and speculators “increased their positions in energy markets by 64 percent since June 2008 to the highest level on record.” And just last week, the CFTC reported that almost 90 percent of oil traders betting on rising prices are speculators, while just 12 percent of these bets were “held by producers, merchants, processors and users of the commodity.”
Despite this, the Republican’s House Agriculture spending bill, HR 2112, slashes funding for the CFTC by 44 percent from levels Obama requested. The $172 million appropriated for the CFTC is also $30 million – 15 percent – less than 2011 levels. But this isn’t the first time the GOP has taken a stance against measures that would end gas price increases. The House GOP already voted twice to slash funding to the CFTC. And as the Hill reported, these cuts to the CFTC “would significantly curtail the timely and effective implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.”