In a letter sent to Republican congressional leadership on Tuesday, 48 Senate Democrats criticized the large Republican cuts to the Commodity Futures Trading Commission and clean energy investment in a time when oil market speculation is at record levels. The House continuing resolution for the 2011 fiscal year (H.R. 1) “will condemn our country to continued reliance on foreign oil and allow market manipulation that could lead to gas prices rising unchecked,” they said:
As you know, H.R. 1 would reduce funding for the Commodity Futures Trading Commission (CFTC) by one-third. The CFTC serves as an important “cop on the beat,” working to protect American consumers by cracking down on manipulation and other market abuses that can drive up oil prices. Yet your spending plan would shrink the CFTC budget back to 2008 levels, when Americans were blindsided by both record high gas prices and a financial crisis that cost us millions of jobs. According to CFTC Chairman Gary Gensler, these cuts would cause “significant curtailment of staff and resources.” At a time where gas prices are rising and squeezing American families, we have a responsibility to provide our watchdogs the resources they need to fulfill their important oversight and regulatory responsibilities.
Watch commodities experts explain how the Republicans’ plan could leave excessive speculation unchecked:
“We find it equally troubling that your preferred budget would cut billions of dollars in investments in critical programs focused on developing new alternative fuels and clean energy technologies, undermining our competitiveness and increasing our trade deficit with oil producing nations,” the Democrats wrote.
As economist James Hamilton explained in 2008 in “Understanding Crude Oil Prices,” speculators will take advantage of situations when consumers don’t have ways of switching off oil (“demand elasticity”), dramatically increasing price spikes (“price volatility”). The Republican agenda at the federal and state level is designed to keep Americans hostage to oil — killing off high-speed rail, public transit, electric cars, smart growth, biofuels — while preventing regulation of the profiteers and vulture capitalists benefitting from political instability in oil-producing nations.
The only Democratic senators that did not sign the letter were Sen. Kirsten Gillibrand (D-NY), Sen. Ben Nelson (D-NE), Sen. Mary Landrieu (D-LA), Sen. Joe Manchin (D-WV), and Sen. Jim Webb (D-VA).
A spokesman for Sen. Gillbrand tells ThinkProgress that she, too, opposes cuts to the CFTC.