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FOR IMMEDIATE RELEASE |
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State
Rep. Mark Longietti |
  
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Longietti: Resolution urging Congress to investigate oil prices adopted by House
Pa. lawmaker says resolution encourages the federal government to look into price speculation
HARRISBURG, June 26 – A resolution introduced by Pennsylvania state Rep. Mark Longietti, D-Mercer, that would send a message to Congress urging them to look into possible oil price manipulation was adopted by the state House on Thursday.
Longietti said his resolution (H.R. 788) is one of the few ways the state legislature can influence the federal government to act on stemming the increase in oil prices and fueling the energy crisis facing citizens across the country. Through the resolution, Longietti said Pennsylvania is sending a bipartisan message to Washington, D.C., that investigating the role of speculation in the oil commodity market is important to finding the root causes of the spikes in oil prices impacting millions of Pennsylvanians.
"As the U.S. dollar devalues, institutional investors are pouring more money into commodities as a hedge to inflation," Longietti said. "These investors are not buying oil contracts because they need oil or want to sell it to consumers. Instead, they are buying oil contracts to hold oil as a measure of value, just like stocks and bonds. This could be playing a major role in the record high prices in the oil market and could be the leading cause of rising oil prices unrelated to supply and demand. We need to look into this and see what impact this is having on the price of oil."
The USA Today reported that billions of dollars have been invested in commodities speculation, including crude oil, over the last several years. From 2003 to 2008, index speculators have risen from $13 billion to $260 billion.
"These alarming numbers alone should warrant a federal public investigation because it is clear that the precipitous rise in oil prices is concurrent with the increased activity of these speculators," Longietti said. "A public investigation on the federal level is warranted and would be highly productive in learning more about what could be causing the record prices of oil."
Longietti said that speculators are also using unregulated Over The Counter (OTC) markets to buy oil futures contracts. Large transactions are not tracked on these markets making price manipulation hard to detect.
"The U.S. Congress needs to use its subpoena power to shine the light on large investors and speculators and determine whether unregulated markets are being used to drive up and manipulate oil prices," Longietti remarked. "I am pleased that my colleagues in the House on both sides of the aisle support this resolution and are eager to find out what role speculators have on the price of oil."
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