House Ag Committee hearing: Walz grills Wall Street

Looks like the Veterans Affairs committee isn't the only place where Walz is asking tough questions. We just received this press release and pdf from the congressional office:

WALZ GRILLS WALL STREET SPECULATORS AT AG COMMITTEE HEARING
House Ag Committee hears testimony on oversight of oil speculation market

(Washington, D.C.) - Today, Congressman Tim Walz, a member of the House Agriculture Committee, grilled witnesses in a hearing held in response to growing concern that speculators and commodity traders are driving oil prices higher. At today's hearing, Congressman Walz had the opportunity to hear from experts who testified about the role that excessive speculation is playing in driving up global oil prices, and he sharply challenged the testimony of others who suggested that this speculation does not contribute to skyrocketing gas prices.

"Today, I heard from some experts in the field who testified about the role Wall Street speculators play in driving up oil prices," said Walz. "Gas prices are up and people are hurting - and hurting bad.  That's why I asked tough questions of these witnesses. These speculators have some explaining to do."

Walz continued: "I'm not the only one who thinks that speculation is a problem. Just last December, the Secretary General of OPEC said: 'The market is not controlled by supply and demand...It is totally controlled by speculators.' It will take bipartisan work from Democrats and Republicans to crack down on Wall Street speculators and bring down gas prices.  I'm going to keep fighting to crack down on excessive speculation and price gougers until working people get some relief."

In his questioning, Congressman Walz also mentioned a letter sent today by executives of all the major U.S. airlines today to airline customers around the world.  The letter states in part, "Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight.  Together, these reforms will help cool the over-heated oil market and permit the economy to prosper."

Congressional oversight of commodity futures trading is under the jurisdiction of the House Agriculture Committee, chaired by Congressman Peterson. The Farm Bill, enacted into law earlier this month over the  President's veto, reauthorizes the chief regulator of these markets, the Commodity Futures Trading Commission, through 2013.  The Commodity Futures Trading Commission (CFTC) is the chief U.S. regulatory agency that oversees the actions of the futures and option markets.  The CFTC was created in 1974 with the mandate to ensure market integrity, protect market users from fraud and abusive trading practices, and to prevent and prosecute price manipulation in the commodity markets.

Attached is a fact sheet about the CFTC.[CTFC.pdf]

While we're on the topical of gas prices, we'll add a bit about Offshore Drilling and Energy Conservation: The Relative Impact on Gas Prices, the new issue brief from Dean Baker at the Center for Economic and Policy Research. Readers may have already seen read the discussions at MinnPost and MnpACT! (The latter mentions Boone Pickens' plan; here's an interesting critique up at Emergy smart in Picking at Pickens’ Plan). As MinnPost's Ron Way noted:

According to the Center for Economic and Policy Research (CEPR) in Washington, however, there's not enough oil in offshore areas to make much difference in world prices — which drive most worldwide pump prices, including those in the United States.      

Citing figures from the U.S. Energy Information Administration (EIA), the center said that at full production — which would be more than 20 years off, the EIA projects  — offshore reservoirs may yield 200,000 barrels of oil per day.

Baker's issue brief doesn't stop with that; he also took a look at the effect fuel efficiency standards could have had on demand. Way sums it up:

The CEPR said that had the U.S. improved automobile efficiency standards at a very modest rate of four-tenths of a gallon per year between 1985 and 2007, the United States would have saved a staggering 3.3 million barrels of oil a day, or more than 16 times the rate that may be obtained from offshore sources.

In today's Strib, columnist Nick Coleman contrasts the research with the claims made by those repeating the drill, drill, drill mantra in An oil-drilling myth repeated by politicians is just plain oily. He begins:

The Chinese are drilling for oil off the coast of Cuba -- just 45 miles from Florida -- and I don't like it. Neither does Rep. Michele Bachmann, Vice President Dick Cheney, Sen. John McCain and other righteous Americans who are so ticked off about the China connection that we can't see straight.

Or think straight, either.

Do you want to know the problem with the Chinese taking offshore oil from Cuba while American oil drillers sit on their hands because pansy global warming freaks won't let us punch more holes in the ocean and we pony up $4 a gallon to fill the family Hummer?

The problem is it isn't true.

Coleman left an important urban legend true believer: Brian Davis, who has been spouting the urban legend about Chinese drilling since at least January.

And the kicker here is that not only does Davis want to drill everywhere, he goes Bachmann et al one up. He also proposes eliminating fuel-efficiency, or CAFE, standards entirely. As Minnesota Central pointed out, Davis is simply wrong when he says that CAFE standards haven't been successful:

Davis contention that were “little success” are disputed by a committee of the National Academy of Sciences who wrote a 2002 report on the effects of the CAFE standard. The report’s conclusions include a finding that in the absence of CAFE, and with no other fuel economy regulation substituted, motor vehicle fuel consumption would have been approximately 14 percent higher than it actually was in 2002

Davis touts his energy industry creds, but hasn't worked in the field for 25 years as we noted in His brilliant career: about that nuclear power industry work.

It shows.

And now, since Davis's view on energy policy demand comic relief, here's the Daily Show on ending our oil addiction:

Photo: Derrick in Rochester, swiped from the Minnesota Historical Society.

Comments

[MinnesotaCentral]

Thanks for pointing your readers to the CEPR report. How much more succinctly can it be stated ! Too many politicians are jumping on the drill bandwagon, without telling voters that it will be a decade(s) before some of that oil is extracted and refined … and then those wells will run dry. Drilling may be a short term band-aid but a long term solution has to include more efficient products producing an overall reduction in consumption.
But in this political year, politicians are responding to consumer’s cries (people see a $100 bucks going in their tank and remember when it was only $20 … but they don’t realize that their health care costs have gone up that much, but it may have been paid by an employer or they elected not to buy health insurance). The OCS drilling is working for the Republicans … voters respond to fear … “the Dems will raise your taxes” + “the Dems won’t let us drill” = A fear-inspired voter giving Norm Coleman six more years.

My June 12 blog commentary discussed the Pickens Pampa Wind Project … and I am glad that Pickens has taken to radio, TV etc. to educate people and promote his investment. Pickens has already placed his money into the project even though the Senate has not addressed whether it will renew the existing renewable energy tax credit. All it will take is one more vote to end the cloture … and if John McCain would show up (he hasn’t voted since April 8th missing 78 votes) and tell voters how he feels. After all, on May 12th , he spoke at Vestas Wind Technology “wind power will bring America closer to energy independence” --- yet his previous votes against tax credits explain why he does not want to make any votes right now ! Right now, the wind energy business is standing still --- orders pending but waiting to hear what the tax rules will be.

Corner House Comments has posted encouraging voters to contact our Senators to move along the Mental Health Parity legislation which has been mired in the Senate for too long, but the Renewable Energy legislation has more immediate implications.

Yesterday, when I read the Nick Coleman column, I immediately thought of your efforts to dispel these rumors … but the tally is that Norm Coleman was the 11th Senator to mangle this claim plus countless Representatives, so I give Nick a little allowance for missing Dr. Davis AND JOHN KLINE !

Keep up the great work.

Oh, and support the PUMP Act which I suspect was at the heart of the Ag Committee hearing. I wonder how many Republicans showed up and what was the questions they phrased?