Senators searching for the bad guys

Senators Byron Dorgan (D-N.D.) and Amy Klobuchar (D-Minn.) held a press conference to discuss the Stop Excessive Energy Speculation Act. Dorgan said the act's future lies in Republican support, saying that ending speculation is the first step in lowering oil prices and emphasizing that the need to halt excess speculation in the oil futures market is separate from calls for increased domestic drilling.

Dorgan said speculative oil prices have increased from 37 percent in 2000 to 71 percent in 2008. He called the market "infested with excess speculation," saying though United States must develop alternative energies, a short term solution rests in controlling oil futures. Without high speculative costs, Dorgan said prices at the pump could be reduced by 20 to 40 percent.

Klobuchar, in response to suggestions that oil prices are reflective of the law of supply and demand, said American demand for oil has not increased by 25 percent, an increase she said would warrant higher prices at the pump. She cited oil executives statements that oil should be $50 per barrel and said the Stop Excessive Energy Speculation Act would put 100 "cops on the beat" who would oversee the activity of traders in the oil market. "Follow the money and you'll find the bad guys" was the advice given by Klobuchar in reference to traders on Wall Street who, she said, are running away with Americans' money.

Supply and demand still a law

The House Committee on Agriculture met to discuss the Commodity Futures Trading Commission (CFTC) and its role in monitoring oil prices. Rep. Jeff Moran (R-Kan.) said that speculation is a component of high oil prices but that speculation is being used as a scapegoat and preventing Congress from addressing other important issues.

Walter Lukken, acting chairman of the CFTC, said that the CFTC launched an investigation in December 2007 to monitor the oil prices, realizing that enforcement and regulation is imperative to the industry. According to Lukken, the CFTC has found that the cost of oil properly reflects supply and demand, adding that the CFTC is unable to find evidence supporting claims that speculation is driving up prices at the pump. Lukken said he welcomes evidence showing why oil prices should be lower than they currently are.

Lukken also said that the CFTC is able to monitor a complex market despite being understaffed. He stated that the CFTC has asked for $27 million dollars in order to increase its staff to historical levels. Lukken told the committee that the CFTC has seen an 8,000 percent increase in activity and will be unable to sustain itself without additional employees.

Lukken expressed support for the Farm Bill, saying that the CFTC is working to comply with it and asking Congress to allow its implementation before revising it. Lukken also said he is confident that the Farm Bill has closed the “Enron Loophole,” a loophole that allows for exchanges made electronically to circumvent US regulation.

House Majority Leader calls for domestic drilling

In his weekly pen and pad briefing, House Majority Leader Steny Hoyer (D-Md.) said that Democrats are supportive of using U.S. products to combat the rising oil prices. He said the most viable option, drilling in federal land and water, was still opposed by Republicans who want to drill offshore or in the Arctic National Wildlife Refuge (ANWR). He said that there are 68 million acres of federally owned land in the U.S. and this land shelters 107 billion barrels of oil and 658 trillion cubic feet of natural gas.

Hoyer said the only tool to lower gas prices in the near future is to try and control oil speculation. He told the press that his oil experts said that production cost was not really the driving force behind the colossal rise in gas prices, but that speculation accounted for between 20 and 50 percent of rising gas prices. He said that drilling ANWR would completely ignore the substantial supply already available in federal land.

He said that President Bush has done nothing to encourage conservation since taking office. Hoyer said that the Republicans may want oil prices to go down but instead of taking action he said they just offer subsidies to oil companies. He said that Senator McCain’s (R-Az.) new plan to develop an electric car was created to balance out the four billion dollar tax cut he proposed for the five largest U.S. oil companies.

Former USSR upcoming oil source

Noting Americans’ concern about oil prices, the Senate Foreign Affairs Committee met to discuss energy potential in the Central Asian states. Sen. Joe Biden (D-Del.) said that Central Asia is strategic to US energy security. In his submitted statement, Sen. Dick Lugar (R-Ind.) said that Central Asian states would benefit by lessening their reliance on Russia and increasing trade relations with Europe and North America.

Lugar stated that finishing the East-West corridor, a pipeline that would carry oil from the Caspian Sea region to European markets, should become a priority of the transatlantic community. He advocated increasing diplomacy with Kazakhstan, supporting democratic transitions in the region, and linking energy from the Caspian Sea with Central Europe directly.

Zbigniew Brzezinski, former national security adviser to President Carter, attended the hearing to discuss US relations with Russia. Brzezinski spoke of a long-term relationship between North America, Europe, and Russia, a relationship he characterized as “Vancouver to Vladivostok.” In this agreement, Brzezinski said that both sides would benefit; Russia would provide energy resources while Europe and North America would supply the necessary infrastructure. Brzezinski said that Russia’s desire to maintain a monopoly on Central Asia and repeatedly cutting energy to the Baltic states damage the potential of this relationship.

Brzezinski also spoke briefly on US relations with Iran. Brzezinski said that the US must recognize Iran’s energy potential, stating that Iran’s government is losing support among its modern and sophisticated youth. Brzezinski added that a military conflict with Iran would not only be extraordinarily destabilizing to the United States in the short run, but that it would also cause the US to become caught in conflict over a large region stretching from Iraq to Pakistan.

Republicans regret lack of progress on oil

At a pen and pad briefing, House Minority Whip Roy Blunt (R-Mo.) and House Republican Conference Chairman Adam Putnam (R-Fla.) discussed high-energy costs and unemployment insurance.

On the topic of oil, Blunt said that the failure to pursue what Republicans have wanted for years has led to the high prices seen now. He said that the Republicans have specific solutions to the oil crisis and expressed remorse that nothing has been done in the House to solve the problem.

When asked about the unemployment insurance bill, Blunt voiced his opposition. He said that the bill would allow employees who work for as little as two weeks to get up to 39 weeks of unemployment benefits. Putnam said that the bill is unnecessary because there is a proven model in place that the Democrats want to break.

Also, when asked about Barack Obama’s nomination, Putnam said that the Democrats’ have a lot of patching up to do to achieve party unity.