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FOR IMMEDIATE RELEASE |
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State
Rep. Mark Longietti |
  
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Longietti introduces resolution urging Congress to look into possible oil price manipulation
Pa. lawmaker says speculation in oil commodity market could be leading cause of high prices
HARRISBURG, June 10 – With the price of oil reaching record highs, Pennsylvania state Rep. Mark Longietti, D-Mercer, recently introduced a resolution that would encourage the federal government to look into other possible causes of oil price spikes beyond the issues of supply and demand.
Longietti said his resolution (H.R. 788) would urge Congress to investigate the role of speculation in the oil commodity market and the occurrence of possible price manipulation. He said as the U.S. dollar devalues, institutional investors are investing more in commodities as a hedge to inflation. This could lead to high price spikes in the oil market, and could be the leading cause of rising oil prices unrelated to supply and demand.
"It is imperative that Congress investigates the role of speculators in the price of oil in the commodities market because the trends are alarming – the price of oil on the commodity market rose 13 percent last week alone," Longietti said. "A public investigation is warranted and would be highly productive in learning more about what could be causing the record prices of oil."
Longietti said that an article in USA Today, titled "Institutional Investors Cited in Rising Oil Prices," states that investors are pouring billions of dollars into commodities speculation, including crude oil. From 2003 to 2008, index speculators have risen from $13 billion to $260 billion through March 2008. Longietti said it is clear that the precipitous rise in oil prices is concurrent with the increased activity of speculators in the commodities market.
"Federal treasury Secretary Henry Paulson, former head of the investment banking firm Goldman Sachs, said that speculation is not to blame as investors follow the trends and do not set them, and that supply and demand is to blame for spiking oil prices," Longietti said. "But to the contrary, the recent financial crisis in the housing market was caused by investors, as was the technology stock bubble that burst in 2000. The administration in Washington, D.C. has been dragging its feet with a forthright and detailed investigation. Congress needs to step in and conduct an independent and unbiased review of this issue.
"We cannot ignore the signs that commodities could be the root problem of the price of gas at the pump, and not simply a result of supply and demand," he added. "My resolution urging Congress to act in this fashion represents one of the few ways that we, as a state legislature, can act to deal with rising gas prices."
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