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FLASHBACK: In July 2008, Senate Republicans Blocked Bill Limiting Oil Speculation

President Obama last week announced a task force that will “investigate to see if fraud or manipulation in oil markets is behind the spike in gasoline prices,” which has significantly cleared $4 per gallon in several parts of the country. Sen. Richard Blumenthal (D-CT) has also raised the notion of a grand jury investigation into oil market speculation.

According to the Commodity Futures Trading Commission — the government’s commodity markets watchdog — speculative positions in energy are currently at an all-time high and several analysts (including those at Goldman Sachs) have concluded that speculation is pushing up gas prices. Thanks to the Dodd-Frank financial reform law that was signed by President Obama in July 2010, the CFTC is allowed to set “position limits” on such speculation, but the final regulations won’t be implemented until early 2012.

But the CFTC could have gotten started on its rulemaking two years earlier were it not for Senate Republicans. In July 2008, the House overwhelmingly passed a bill directing the CFTC to limit speculation in the oil market. However, Senate Republicans filibustered the bill in the Senate, preventing it from ever coming up for a final vote:

Senate Republicans on Friday blocked a vote on legislation to rein in speculation in the energy markets, instead calling for energy votes that would expand domestic petroleum production and more nuclear power development. Democrats, in a 50–43 vote, failed to gain the 60 votes needed to bring the speculation bill forward for consideration on the Senate floor.

Amongst Republicans, only Sens. Olympia Snowe (R-ME) and Susan Collins (R-ME) voted for the legislation (while Senate Majority Leader Harry Reid (D-NV) voted against it as a procedural matter, allowing him to bring the bill up for consideration later). At the time, Senate Minority Leader Mitch McConnell (R-KY) said that “we don’t have a problem with taking a look at speculation,” but that the GOP would refuse to move forward unless the bill included opening up more federal land for drilling (which would have a negligible effect on gas prices).

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Having the CFTC begin in July 2008 the work that it began last July would have brought limits on speculation online this summer, instead of next, if the CFTC were working on the same timetable it is now. Technically, Dodd-Frank called for speculation limits to be in place three months ago, but the CFTC missed its deadline, in part due to conservative opposition to the limits.