On Tuesday, President Obama boldly called for cracking down on rampant oil speculation, which experts say has increased the amount consumers pay at the pump by as much as $10 dollarsper a tank of gas.
In response, the Republican Party and a set of big business-friendly blogs are rushing to promote a video clip of a former Commodity Futures Trading Commission (CFTC) member who claimed earlier this week that he “never saw any empirical data that said speculators were responsible for an increase or a spike in fuel cost.” The CFTC is the regulatory body charged with overseeing the commodity markets.
The problem? Michael Dunn, the former commissioner in the video clip, is now a lobbyist for a group of Wall Street speculators. In October, Dunn stepped down from his regulatory position to later take up a job this year at the lobbying firm Patton Boggs. Patton Boggs has several finance industry clients, including the Wholesale Markets Broker Association, which represents several commodity trading exchanges. The Association paid Dunn’s new employer nearly $1 million last year to lobby the government.
Of course, part of the reason we haven’t taken any meaningful action on excessive speculation in decades is because of money in politics. Speculators spent vast amounts of lobbying dollars to water down and kill regulations like “position limits,” which would curb the power of noncommercial oil speculators. And the revolving door, also known as “Backdoor Bribery,” is a source of this corruption. Walter Lukken, a top CFTC official, also recently left government to join a Wall Street speculator lobbying group.
And it’s also ludicrous for Dunn, who spent most of his time on the CFTC blocking common-sense speculation reforms, to claim he “never saw any” evidence that excessive speculation leads to higher prices. Here’s a partial list of studies that show how reckless speculation drove up oil prices in 2008:
— Rice University’s Baker Institute for Public Policy shows a clear increase in the size and influence of noncommercial traders, or “speculators,” in the oil futures market since regulations were eased by the Commodities Futures Modernization Act of 2000.
— Stanford University’s Kenneth Singleton report on speculation in the oil market.
— “How Wall Street Speculation is Driving Up Gasoline Prices Today,” a study by Robert Pollin and James Heintz of the Political Economy Research Institute at University of Massachusetts, Amherst.
And Dunn’s own former employer even released a report — while Dunn was still a commissioner — fingering oil speculators for the 2008 price spike. Maybe Dunn didn’t notice the the study because he was busy negotiating his future salary at Patton Boggs?
Filed under: Lobbying