Sens. Durbin, Harkin Hold Hearing on Oil Market Oversight; Durbin Promises More Resources to Fight Excessive Oil Speculation and Market Manipulation

U.S. Senators Dick Durbin [D-IL, pictured] and Tom Harkin [D-IA] chaired a hearing today to investigate how excessive speculation in the oil market may be contributing to the historic run on oil and gas prices.

Durbin is the chairman of the Appropriations Subcommittee on Financial Services and General Government, the subcommittee responsible for overseeing the budget of the U.S. Commodity Futures Trading Commission [CFTC]. Last month, Durbin chaired a hearing on the budget request for the CFTC.

Last week, at a hearing before the Senate Agriculture Committee, the agency charged with oversight of the agency, CFTC officials testified that additional resources, including more staff, are needed to help this agency carry out this mission.

Today's hearing, held jointly before the Senate Appropriations Subcommittee on Financial Services and General Government, and the Senate Committee on Agriculture, Nutrition, and Forestry, probed the CFTC's role in regulating the market and what tools and resources the agency needs to ensure it is able to be a robust market watchdog.

"With the economy in a tailspin and with the average price for a gallon of gas topping $4 across the country, people are asking ‘Why is this happening?'" Assistant Majority Leader Durbin said. "Is excessive speculation taking place, or is it simply supply and demand? The answer is that no one knows, and the CFTC lacks the information, resources and, in some cases, the legal authority to tell us."

Testifying before today’s joint panel were the chief executives of the New York Mercantile Exchange [NYMEX] and Chicago Mercantile Exchange [CME], as well as the vice president of IntercontinentalExchange [NYSE: ICE]. Also testifying were representatives of the Consumer Federation of America and the Air Transport Association.

“In the past year, gas costs have risen 30 percent," said Harkin. "Consumers are seeing the results of this increase in rising costs for everything -- from the gas they put in their vehicles, to the loaf of bread at the grocery store. We deserve to know why.

"We rely on the CFTC to tell us whether our commodity markets are working, or whether manipulation or distortion of markets by excessive speculation is causing price bubbles that should be addressed. With CFTC officials testifying previously that additional resources, including staff, are needed to carry out their oversight responsibilities, Congress has a responsibility to provide them with the resources and authorities they need to do their job. We addressed some of this in the Farm Bill, but further resources may be needed."

CFTC is the nation’s leading regulator of futures markets. However, a lack of resources and weakened authorities have prevented them from being able to gather information and effectively monitor the full breadth of the oil market.

Currently, CFTC is only able to monitor the activity that takes place on U.S.-based exchanges – a fraction of the total market for oil transactions. They are unable to gather information about trades which take place on global markets, like ICE, or on over-the-counter exchanges between firms.

In addition, trading in commodity markets has exploded from nearly 500 million trades in 2000 to over 3 billion trades in 2007. CFTC’s staffing levels, however, have not kept pace. Full-time employee [FTE] levels have dropped over that same period of time, from 546 in 2000 to 437 last year – nearly a 21 percent decline. "CTFC simply doesn’t have enough cops on the beat," Durbin noted.

To address these shortcomings, Durbin introduced the Increasing Transparency and Accountability in Oil Prices Act of 2008, which:

*Authorizes new resources, including staff and better information technology, for the CFTC. These 100 new employees would immediately address the staffing shortfalls at the agency, and the technology funding would help the agency update woefully antiquated monitoring and analysis systems. "We could hire 100 people and put them to work tomorrow, given the inflow of trading volume," CFTC Chairman Walter Lukken said just two weeks ago. "We are doing the best we can in difficult circumstances."

* Improves transparency in market. CFTC currently has limited visibility of trades that take place on NYMEX, and very little visibility of over-the-counter trades -- such as trades from one hedge fund to another, or those that take place on ICE in London. Durbin’s legislation would close the so-called “London Loophole” by requiring all U.S. traders on oil futures markets to report transactions in a detailed manner to the CFTC. The bill also directs the CFTC to investigate the impact of these trades on the price of oil.

* Finally, the legislation would move the CFTC’s Inspector General’s office out from under the office of the agency’s chairman, giving it clear independence.

Durbin Promises More Market Oversight Staff and Computer Technology to CFTC to Fight Excessive Oil Speculation
After hearing Lukken's testimony today, Sen. Durbin released the following statement:

"Increasing evidence shows that the run-up in crude oil prices and gasoline is being driven by larger trader banks, pension and hedge funds. Speculation may have as much, if not more, to do with high gas prices than any Saudi sheik.

"The announcement at our hearing that CFTC it is now going to require more complete disclosure of speculative trading information is critical to stopping the excessive speculation and market manipulation that is driving up gasoline prices.

"Now, we need to give this agency the professionals and computer tools they need to stop any market manipulation. As chairman of the Appropriations Subcommittee which oversees the agency’s budget, I will work to secure a substantial increase in CFTC’s funding to make sure it has the resources to keep excessive oil speculation in check."

GoodBiz113's take: Now that gas has topped the $4-per-gallon tipping point in many U.S. markets, the oversight efforts of Sens. Dick Durbin and Tom Harkin are greatly needed and appreciated -- by consumers, small-business owners [e.g., farmers, independent truckers], air transport carriers, plus countless other entities. We applaud the senators for investigating the roles that CFTC and other entities play during this unprecedented run on oil and gas prices [oh, and the fattest paychecks that Big Oil CEOs have ever received], and for taking action to halt the excessive speculation and market manipulation that's driven those prices sky-high.
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Al Franken Wins Minnesota DFL Nomination to Run for U.S. Senate in 2008

Editor's note: This weekend, during Minnesota's DFL convention at Rochester's Mayo Civic Center, Al Franken won the nomination to challenge Republican Norm Coleman for the U.S. Senate in 2008. Following, is the acceptance speech delivered by Franken -- a true ally of small business, farmers, labor, environmentalists, educators, students, soldiers, veterans, consumers and, well, everyone else seeking a new direction for our nation.

Thank you.

I want to start by thanking my family. I think you all know Franni, don't you? My daughter Thomasin. You might not know Joe, he's been kind of -- he's been doing a lot of work. And my sister-in-law Carla, who looks suspiciously like Franni.

I also want to thank my staff, my volunteers, the interns. We've been at this awhile, we've been at this awhile. Thank you, guys, thank you. I want to thank my supporters, elected officials who supported me, stuck by me. I want to thank all of you, most of all. But first let me say something about Jack Nelson-Pallmeyer.

You know, earlier in the questions-and-answers, I was asked why am I a Democrat. You know, I'm a Democrat because this is the only party that would have a Jack Nelson-Pallmeyer. This is the only party that would have a man of such compassion and wisdom and energy, such a pure heart, and such a strong soul. It has been an honor to share the stage with you, sir, and I hope to do so for the next five months and beyond.

And the same goes for Jack's supporters, to his staff, to his volunteers, to his interns. I'd be honored to share a stage, or share a convention, or share a meeting, or share a campaign rally, or share anything with you. You are fantastic.

I want to thank Amy Klobuchar, who will make a great senior senator in Washington. And I want to thank our congressional delegation, from whom I will continue to learn so much.

But most of all, I want to thank you delegates who have put your faith in me. And it is in that spirit, with tremendous gratitude and tremendous humility, that I accept your endorsement.

You know, we have been waiting for eight years to take this country back. And this year, we have seen the emergence of a new progressive majority in this state and in this country.

You saw it on Feb. 5, Caucus Night, when over 215,000 DFLers showed up for the caucus, to say they're ready for a new direction. And a lot of you hung out in hot, crowded rooms for a few hours, and I thank you for going through that process and being here today.

We have a new progressive majority in this country, and we know what we want.

We want universal health care.

We want an economy that works for everyone, not just the special interests.

And I want to thank my friends in labor, who have been through me with this all the way. Thank you.

We want to address global warming and create "green" jobs in renewable energy and energy efficiency.

We want a world-class education for all our kids so they can compete in a 21st century economy.

And we want to restore our standing in the world, starting with getting out of Iraq and bringing our troops home.

We have a lot of work to do together.

We're going to canvass until our feet hurt, and when our feet hurt, we'll start picking up the phone, start phone-banking. We're going to get up early and stay up late.

And we're going to do it because five million Minnesotans need a voice in Washington, and they don't have one in Norm Coleman.

On issue after issue, he hasn't brought people together to get things done. He's sold people out to get ahead.

Minnesota has the second-highest rate of subprime foreclosures in the country, and families I talk to every day are worried about losing their home equity and their chance at building wealth. These families need help. But Norm Coleman doesn't work for them. He works for the mortgage companies. That's why he voted against helping people who have gone bankrupt because of health-care crises from keeping their homes.

Minnesotans are paying four dollars a gallon at the pump. But Norm Coleman doesn't work for them. He works for the oil companies. That's why he voted to give them billions of dollars in tax subsidies while they were already raking ridiculous profits.

Minnesota seniors are paying too much for their prescription drugs -- so much that they can't afford to take the medications that they need. But Norm Coleman doesn't work for them. He works for the big drug companies. That's why he voted to prohibit Medicare from negotiating with the pharmaceuticals for lower drug prices.

Minnesota veterans need the health-care benefits they were promised. Minnesota students need the loan aid that will help them to make tuition payments. And the young Minnesotans serving bravely in Iraq need a senator who will bring them home. But Norm Coleman doesn't work for them.

Norm Coleman went to Washington to play a game. The game works like this. Norm Coleman accepts hundreds of thousands of dollars in campaign checks from corporate interests. He votes to give them special handouts and tax breaks that come out of our pockets. Then he comes back to Minnesota and pretends it didn't happen. Everybody wins, except the people of Minnesota.

It's time we had a senator who took this job seriously. And that's what this election is about.

It's not enough that we take back the White House. It's not even enough that we take more seats in Congress. We have to take back this government. We have to tell the special interests, you're not so special anymore. We have to elect people who will stand up to the oil companies, stand up to the insurance industry, stand up to the drug companies, and stand up for the working families across this state.

So, to the people of Minnesota, let me say this: I'm not a perfect person. And I'm not going to pretend to have all the answers.

But I'll tell the truth. I will keep my spine and I will work for you.

I will wage a campaign you can be proud of, whether you're a DFLer, or a Republican, or an Independent, or somebody who's never even thought about what party you might belong to.

And I'll be a senator you'll be proud to have working for you in Washington.

Last fall, I went on a 10-college tour. Some of the kids I met with were 11 years old when this president took office. They don't remember that the federal government is supposed to work. They saw Katrina. They saw Iraq. And even sadder, they don't remember when we were once the most respected country on the face of this planet.

After all, we are the country that sent a man to the moon, the country that mapped the human genome, the country that beat fascism and communism, the country that re-built Europe after World War II, and still had enough juice left over to invent rock-and-roll and the Internet.

I believe we can be that country again.

Paul Wellstone said, "The future belongs to those who are passionate and work hard."

I don't think I have to tell you how passionate the people in this room are about taking back our country. Tomorrow, we get to work.

Thank you.

SOURCE: Al Franken for U.S. Senate
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To learn more about Al Franken's politics [and satirical style], check out his latest best-selling book, "The Truth [With Jokes]."