Lipinski Helps Introduce Bill Targeting Oil Market Speculators (August 4, 2009)
Last week, Congressman Dan Lipinski (IL-03) helped introduce the LOPSIDED Oil Prices Act (H.R. 3379), which aims to lower oil prices by curbing speculative trading and produce billions of dollars to improve the nation's roads, streets, and public transportation.
"This bill is a win-win proposition, especially for middle-class Americans," Lipinski said. "It aims to lower prices at the pump for consumers, moderate the price volatility that individuals and businesses have come to dread, and pay for vital transportation projects. The only losers are the wealthy speculators whose actions have done America's economy nothing but harm by helping to drive up the cost of fuel."
The bill includes an exemption for legitimate hedgers, such as airlines and railroads, but noncommercial traders such as Wall Street banks and hedge funds would have to pay a 0.2 percent tax on crude oil futures and a 0.5 percent tax on the premium of crude oil options. Many economists and market observers agree that speculative trading is partly to blame for the irrationally high prices and wild fluctuations in the oil market that have become all too familiar in recent years.
The bill, which requires all revenues to be deposited into the Highway Trust Fund, could raise $190 billion for vital transportation projects over six years. Devoting the money to transportation makes perfect sense, since 70 percent of oil consumed in the United States is for transportation.
The bill's introduction comes as federal regulators are scrutinizing the impact of speculation on oil prices, which have risen dramatically this year despite the ongoing recession. Bart Chilton, a commissioner at the federal Commodity Futures Trading Commission, spoke for many people concerned about speculation when he said in June: "Crude oil prices are up 60 percent on the year. Supplies are at a 10-year high, and demand is at a 10-year low. You do the math. Why should prices be over $70?"
"The price of oil should be set by the forces of actual supply and real demand, not by traders at a handful of giant investment banks and hedge funds who have no intention of ever taking delivery of a barrel of oil," Lipinski said. "The excessively high prices we have been paying at the pump represent just another way that Wall Street lines its own pockets at the expense of the broader economy and the American people."
(August 4, 2009)