U.S. Senator Bill Nelson (D-FL) has called on President Barack Obama to oust a top Washington regulator if there are continued delays of new trading rules that could curb the rise in gas prices.
Nelson, in a letter to the White House, said Gary Gensler, chairman of the Commodity Futures Trading Commission, should be held accountable over the commission’s delays in imposing new congressionally mandated restrictions on speculative trading of futures contracts, including for oil and gas.
“The CFTC was supposed to implement the new rules by January 2011,” Nelson wrote in his letter. “But intense pressure from industry lobbyists is delaying reform. … If Chairman Gensler doesn’t act soon to implement rules that will cut down on speculation in the oil futures markets, then you should consider not reappointing him.”
Gensler, a former Goldman Sachs executive, serves as chairman of the CFTC at least until later this month when his term expires. A law allows him to remain on the job through next January. Among the commission’s duties is to act as an overseer of speculators who trade in oil futures and other commodities.
There is growing evidence to show these speculators are bidding up the price of oil and flipping futures contracts for a quick profit, much like speculators who bought and resold condominiums during the real estate bubble. Based on one recent Wall Street analysis, 63 cents of every gallon of gasoline is due to speculation. The share of the oil futures market controlled by speculators has more than doubled over the past 10 years. And, during that same time, gas has gone from $1.15 a gallon to an average of $3.97 a gallon.
In order to diminish excessive speculation, Congress passed legislation two years ago directing the CFTC to draft new rules governing commodities trading. But the five-member commission, under Gensler, has been under pressure from the investment banking industry seeking to delay or derail the rules.