Efforts to curb speculative trading in the oil futures market have run into partisan opposition, or are hung up in the courts.
U-S Senate Democrats have sponsored several bills to put limits on how much oil can be held by any trader for the purposes of buying and selling to profit from price fluctuations. Senator Mark Begich is a co-sponsor and enthusiastic supporter of the legislation. He says speculators are running up the price of crude oil, far beyond what would result from simple supply and demand:
“They estimate for every gallon of gas that you and I and your listeners put into their car, 56 cents is speculators. So we have a piece of legislation that gets speculators out, unless you use it for end purpose, freight companies and so forth,” Begich said.
With no bi-partisan support, the bills are going nowhere. Instead, they’ve become politically entangled with other oil and gas issues, particularly the Obama administration’s push to end federal tax subsidies for oil companies, adamantly opposed by Republicans.
Two years ago, the Dodd-Frank Act directed the Commodity Futures Trading Commission to enact what they call “position limits” on the number of oil contracts traders can hold. But implementing the regulation was immediately challenged by the industry in court.
That case is still pending.
Begich says everywhere he goes in the state, people urge him to take action to curb high fuel prices.
Begich is among a group of Democratic Senators involved in the legal case over the CFTC’s “position limit” regulation, filing an amicus brief spelling out their intention to get speculators out of the business of trading in oil futures:
“We’ve joined and I say we, I and other senators have joined a group during over this issue, because these speculators have no business in this market.”
The speculation issue has not always been as partisan. In 2008, when the price of crude oil approached $140 a barrel, Republican Senator Ted Stevens introduced a bi-partisan bill to limit positions held by certain types of investors. He said in five years the amount of crude oil futures held by market index funds had skyrocketed. The bill did not pass.
Those efforts are just one aspect of Begich’s campaign to stabilize costs.
The New York Times credits Begich for helping gain President Obama’s support on oil drilling in Arctic waters off the coast of Alaska.
It’s recognition the senator gladly takes.
The article outlines Shell’s Arctic quest, a seven year, $4 billion effort to win over two presidential administrations and gain federal permits. the company was pursuing permits during the Deepwater Horizon oil spill in the Gulf of Mexico in 2010.
Times’ reporters says Begich’s fervor for Arctic oil exploration helped win over the president to Arctic drilling.
In an interview Tuesday on APRN’s Talk of Alaska, Begich was happy to take some credit.
“When I got elected, here’s what people said. They not only said it behind my back, they said it to me. And they said ‘with Obama in the presidency and a Democrat from Alaska, we’ll never get anything done in regard to oil and gas.’ Oddly enough, the place we’re having development and aggressive development, is going to be in the federal waters,” Begich said.
“You think about oil production in the Chukchi and Beaufort, it could be close to 900,000 additional barrels per day.”
The company plans to begin drilling this summer in the Beaufort and Chukchi seas. Shell awaits final permits from the U.S. Interior Department. Its ships are in Seattle, ready to be deployed to the Arctic this summer. Begich toured one last week.