MEMBERS OF CONGRESS SEND PRESIDENT LETTER TO URGE HIM TO TACKLE OIL PRICES AT G8 SUMMIT
FOR IMMEDIATE RELEASE: July 2, 2008
CONTACT: Emily Barocas/202-225-7295
MEMBERS OF CONGRESSSEND PRESIDENT LETTER TO URGE HIM TO TACKLE OIL PRICES AT G8 SUMMIT
Washington, DC - CongressmanJohn B. Larson, Vice Chair of the Democratic Caucus, along with CongressmanBart Stupak, Chairman of the House Energy and Commerce Subcommittee onOversight and Investigations, sent a letter to President George Bush this weekurging him to bring up the global problem of rising oil prices and particularlyexcess speculation at the G8 Summit later this month. Because oil prices and speculation are aglobal problem, the signers of the letter believe that it can best be solvedwith cooperation across borders.
The letter states, "Withouta comprehensive review of activities in the entire petroleum market, it isunlikely that a truly accurate assessment of speculative behavior and its impacton price can be made. This is particularly true in today's globaleconomy, where strategic cooperation and coordination among nations isnecessary to ensure stability and transparency in globally tradedcommodities."
Congressman Larson (CT-01)said, "The G8 Summit is the perfect forum to bring up anissue that is a top priority not just for us at home, but in countries acrossthe globe. England's Prime Minister, GordonBrown, called oil prices ‘a global shock" that requires ‘globalsolutions.' As Congress works hard totackle this issue, I believe it is incumbent on this President to do what hecan on the international stage as well."
Congressman Stupak (MI-01)said, "Whether an individual exchangecloses in New York, Londonor Dubai,energy markets operate globally. While U.S. regulatorsmust do their part to investigate and address the excessive speculationartificially inflating energy prices, this truly is a global problem thatrequires action from all of the key players in the global economy."
Please see below for the full text of letter.
June 302008
ThePresident
The WhiteHouse
Washington DC
Dear Mr.President:
Theupcoming July 2008 G-8 Summit is an important opportunity to tackle the problemof rising oil prices on a global scale. We urge you to engage yourcounterparts in efforts to reduce global oil speculation and other questionablemarket activities that distort the supply and demand market equation andartificially distort the price of these commodities.
While weunderstand that global supply and demand issues as well as the weak U.S. dollarplay a role in determining price - the fact remains that current supply anddemand conditions do not add up to current market price increases. Speculation, in most cases by individuals that will never take a barrel of oilinto inventory, is placing a distorted premium on the price of oil. This isevident by the nearly $240 billion growth in oil future investments since2000. On March 4, 2008, Guy Caruso, Administrator of the Energy InformationAdministration testified before the Senate that speculation was currentlyadding as much as 10 percent to the price of oil, a relatively conservativeestimate compared to some from the private sector. As far back as March15, 2005, Exxon Mobile CEO Lee Raymond was quoted in the New York Times saying"We are in the mode where the fundamentals of supply and demand really don'tdrive the price." Three years later, during questioning in April 2008before the House Select Committee on Energy Independence and Global Warming,Stephen Simon of Exxon Mobil cited speculation as one of the major causes ofthe exorbitant oil and gas prices we've seen, while executives from Shell, BP,Chevron, and ConocoPhillips agreed.
The U.S. is notalone facing the effects of the recent high spike in oil prices. On May28, British Prime Minister Gordon Brown wrote in The Guardian that "a globalshock on this scale require global solutions" and argued that a global strategyto address the impact of higher oil prices be on the agenda for this year's G-8Summit. We agree with the need for greater international cooperation inbringing transparency to the global petroleum commodity and derivative marketsand urge you to join with Prime Minister Brown and other G-8 leaders to discusssolutions to this critical issue.
Therecent announcement by the Commodity Futures Trading Commission on May 29 thatthey have reached agreements with the United Kingdom Financial ServicesAuthority (FSA) and the ICE Futures Europe for expanded information sharing ontrading activities in regulated markets is a step in the right direction. However, this effort stops far short of bringing transparency to the currentlyunregulated markets. It ignores transactions currently excluded or exemptedfrom CFTC oversight under Sections 2(g) and 2(h) of the Commodities ExchangeAct. We remain concerned that it is impossible to draw realisticconclusions about market behavior when looking at only a fraction of themarket.
Without acomprehensive review of activities in the entire petroleum market, it isunlikely that truly accurate assessment of speculative behavior and its impacton price can be made. This is particularly true in today's globaleconomy, where strategic cooperation and coordination among nations isnecessary to ensure stability and transparency in globally tradedcommodities. In the banking sector, the inter-governmental FinancialAction Task Force (FATF) created at the 1989 G-7 conference to develop andpromote national and international policies to combat money laundering andlater terrorist financing has proved a successful model of internationalfinancial information exchange and policy development.
As youprepare for next month's G-8 summit, we urge you to discuss with your colleaguesa similar effort focused on building international transparency in oilcommodity transactions and developing policies to thwart speculativepositioning or other manipulative behavior that impacts prices and underminesmarket fundamentals.
Sincerely,
Rep. JohnLarson
Rep. BartStupak
Rep.Betty Sutton
Rep. JanSchakowsky
Rep.André Carson
Rep.Ruben Hinojosa
Rep. BillPascrell
Rep.Louise Slaughter
Rep. TimBishop
Rep. JimOberstar
Rep.Henry Waxman
Rep.Tammy Baldwin
Rep. JoeCourtney
Rep. JoeDonnelly
Rep. DaleKildee
Rep. HankJohnson
Rep.Bennie Thompson
Rep.Jerry Costello
Rep. RussCarnahan
Rep. MikeDoyle
Rep.Jerry McNerney
Rep.Sheila Jackson Lee
Rep.Baron Hill
Rep.Maurice Hinchey
Rep.Chaka Fattah
Rep. JohnYarmuth
Rep. RaúlGrijalva
Rep. SteveRothman
Rep.Charlie Wilson
Rep.Diane Watson
Rep.Peter Welch
Rep.James Langevin
Rep.Lloyd Doggett
Rep. PhilHare
Rep. SamFarr
Rep. PaulHodes
Rep. NeilAbercrombie
Rep.Betty McCollum
Rep.Dennis Kucinich
Rep.Michael Michaud
Rep.Xavier Becerra
Rep.Albio Sires
Rep.Ellen Tauscher
Rep.David Wu
Rep. GeneTaylor
Rep.Jason Altmire
Rep. MikeHonda
Rep.Hilda Solis
Rep.Carolyn McCarthy