Senate Proceeding on Jan 13th, 2009 :: 2:12:00 to 2:32:00
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2:11:57 to 2:12:21( Edit History Discussion )

Bill Nelson: the presiding officer: without objection. mr. nelson: mr. president, over the past half year as the price of a barrel of oil rocketed into the sky, all the wayo 47 a barrel, and in one

2:12:00 to 2:32:00( Edit History Discussion )
Speech By: Bill Nelson

2:12:22 to 2:12:45( Edit History Discussion )

Bill Nelson: day the prices coup-price escalating 5, there have been a number of senators out here on this floor and in committee meetings and in private discussions saying "why won't people wake up and realize that it is not the economic marketplace of supply and demand

2:12:46 to 2:13:10( Edit History Discussion )

Bill Nelson: that is determining the price of oil." who wants you to believe that? the oil companies, of course. but, in fact, the price of oil has escalated not because there's a tightness on the world marketplace of demand for oil

2:13:11 to 2:13:32( Edit History Discussion )

Bill Nelson: but, indeed, at the very time a six months' period from the last quarter of last year until the first quarter of 2008, that six-month period when t for oil was going down and the supply was going up which would indicate that the price should

2:13:33 to 2:13:53( Edit History Discussion )

Bill Nelson: be going down if supply is greater than demand. but exactly the reverse was true. the price kept rocketing to the moon. well, it defies the laws of supply and demand.

2:13:54 to 2:14:17( Edit History Discussion )

Bill Nelson: yet we had everyone saying it was the tight world marketplace and it was difficult to get people to listen to a group of us senators that said it was because the commodities fures exchanges had been deregulated

2:14:18 to 2:14:38( Edit History Discussion )

Bill Nelson: and, therefore, unregulated oil futures contracts speculation was running wild. and then once it got up to 47 a barrel, what happened liquidity cris hit, the economic crisis of confidence hit not only in america but

2:14:39 to 2:15:02( Edit History Discussion )

Bill Nelson: across the world. a the faulty mortgages, the subprime mortgages that we're not paying off in the revenue stream because people weren't paying their mortgages and those had. mr. bunning: tled into securities and then bought and sold and a lot of financial

2:15:03 to 2:15:24( Edit History Discussion )

Bill Nelson: institut mutual fund, and, indeed, big investments for pension funds -- started dumping those they needed cash and they started dumping their on oil futures commodities that

2:15:25 to 2:15:48( Edit History Discussion )

Bill Nelson: they had purchased in this speculative frenzy that ran the price up to 47 a barrel. and what happened? the exact reverse. the price of oil starts coming down. so what should we do about this? well, we ought to do what a number of us have been saying --

2:15:49 to 2:16:11( Edit History Discussion )

Bill Nelson: we ought to go back and regulate what we have jurisdiction, which is the commodities futures trading commission. now, why was it deregulated? it was deregulated in the dead of night just before christmas in the year 2000, and it wasw?

2:16:12 to 2:16:34( Edit History Discussion )

Bill Nelson: deregulated at the behest of the en and once they deregulated that commodities futures trading rket on energy, it allowed them to go out and speculate on energy contracts. and what was the first result? in the

2:16:35 to 2:16:57( Edit History Discussion )

Bill Nelson: decade, we saw it happen in california. we saw the electricity contracts start run up in speculative bidding to which it wen up the cost of electricity by as high as 300% in california. and once that started to

2:16:58 to 2:17:18( Edit History Discussion )

Bill Nelson: unravel, then we know what happened. enron started to unravel and all of the shenanigans that had gone on there. but here we are years later after the law was changed, and we haven't been able to get it changed back.

2:17:19 to 2:17:40( Edit History Discussion )

Bill Nelson: becaus say, oh, it's supply in the world market for oil. and they come up with a simple slogan, as if it's going to handle the price of oil when it

2:17:41 to 2:18:04( Edit History Discussion )

Bill Nelson: was hit to about a gallon for gasoline. and a simple slogan -- drill baby, drill -- as if thatere going to slow the price of gasoline and the price so now we hear and people are starting to pay

2:18:05 to 2:18:25( Edit History Discussion )

Bill Nelson: ought to rereeght -- reregulate these futures commodities trading. now what do i mean by "regulate?" i'm talking about simple little things like you would have to use the oil that you're bidding on, like an airline does. it locks in a future price for fuel by bidding on these future

2:18:26 to 2:18:48( Edit History Discussion )

Bill Nelson: oil contracts. and an airline, in fact, does use oil. but by taking away the regulation, they've removed that ability. or, give you another example of regulation. a commodities futures trading commission could say that you have to put a certain amount of money down if you're going to

2:18:49 to 2:19:10( Edit History Discussion )

Bill Nelson: buy a future oil contract instead of getting it with nothing you have to put some skin in the game. but if you cpletely deregulate it, what you leave speculator to go price up and up

2:19:11 to 2:19:31( Edit History Discussion )

Bill Nelson: now, this is what we've been saying on the floor of senate for the last six or eight months, a number of us -- senator dorgan, senator cantwell , this senator, several other

2:19:32 to 2:19:56( Edit History Discussion )

Bill Nelson: but it's been hard to get an audience that would listen. well, mr. president, n respected institution than cbs news "60 minutes" last sunday

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Bill Nelson: night broke it open and put it about as clear as i have ever heard "did speculation fuel oil price swings." and what they concluded that six months ago when oil hit an

2:20:20 to 2:20:40( Edit History Discussion )

Bill Nelson: all-time high of 47 and gas was up around a created a irrational and false claims that the problem was just supply and demand and that the solution was

2:20:41 to 2:21:03( Edit History Discussion )

Bill Nelson: just to drill for more oil. well, it looks a lot different now mixed up this presidential politics as well with those simplified mantras of drill, baby drool -- drill fueled by a

2:21:04 to 2:21:24( Edit History Discussion )

Bill Nelson: slick public relations campaig it was funded by deep-pocket oil companies. yet those same oil companies testified in the spring of 2008 that if supply and demand were the sole drivers of oil prices,

2:21:25 to 2:21:46( Edit History Discussion )

Bill Nelson: that oil should cost no more than a barrel. we had -- than 5 a barrel. we had an executive of two of the big major oil companies, said the normal laws of supply and demand would say that oil ought to be in the range of 5 to 5 a barrel, and they

2:21:47 to 2:22:09( Edit History Discussion )

Bill Nelson: testified, this senator thinks, correctly. and demand justify the wild swings in one instance where oil jumped

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Bill Nelson: 5 in one day for a barrel of oil, ask yourself, could the new demands by china and india of oil, who have needs for new oil products, could that have suddenly caused that price to

2:22:31 to 2:22:52( Edit History Discussion )

Bill Nelson: jump so much in a single day? and the answer clearly is that, no, it was caused that bubble to grow. wall street inv billions of dollars out of the stock market and into the commodities futur market and

2:22:53 to 2:23:16( Edit History Discussion )

Bill Nelson: ultimately into oil, and that's what was the biggest driver of running the price of oil and gasoline up. and what is even more powerful in demonstrating the influence of speculators on oil prices is examing what h

2:23:17 to 2:23:39( Edit History Discussion )

Bill Nelson: prices after here we in the senate and down on the other end of the cap started threatening regulation again. well, guess what happened? the prices went down. and when wall street a financial meltdown with the collapse of lehman brothers and

2:23:40 to 2:24:01( Edit History Discussion )

Bill Nelson: a near collapse of a.i.g., prices fell even more, as the walltreet speculators got out of the oil futures markets to the tune of 0 billion. the speculative bubble in commodities, which was not only energy but agricultural

2:24:02 to 2:24:25( Edit History Discussion )

Bill Nelson: commodities, all of a sudden that speculative bubble demand for oil in the u.s. down by 5%, but the price of oil is down so we shouldn't be fooled by the

2:24:26 to 2:24:48( Edit History Discussion )

Bill Nelson: drop in prices. some financial analysts, fortunately, are not fooled by the drop in prices. they're low oil prices are a temporary phenomenon and that oil prices will average above 5 a barrel over the next

2:24:49 to 2:25:10( Edit History Discussion )

Bill Nelson: well, a number of us months ago filed a bill to stop the trading of oil and other energy commodities on the unregulated exchanges. and what the bill does, it turns the clock back to a change in law that corporation known as the enron

2:25:11 to 2:25:34( Edit History Discussion )

Bill Nelson: loophole, which opened the way for a flood of speculative money in these commodity markets. mr. president, i am introducing that bill again today, and i seek our colleagues' support. we must be vigilant to ensure that wall street investors do

2:25:35 to 2:25:55( Edit History Discussion )

Bill Nelson: not take advantage of the lax regulation to reap profits by driving up the price of oil and making driving a lot more expensive for the rest of us. we saw -- let's rember this -- we saw what happened with another form of unregulated financial

2:25:56 to 2:26:17( Edit History Discussion )

Bill Nelson: that was those insurance policies that had a fancy name called credit default swaps. they were unregulated, and look what happened. the collapse of a.i.g. that had to come up to the tune of upwards of a 00 billion rescue

2:26:18 to 2:26:38( Edit History Discussion )

Bill Nelson: by the federal government. i don't believe it's simple coincidence that same legislation that let swaps -- those credit default swaps escape regulation also allowed energy traders to conduct their business in the shadows.

2:26:39 to 2:27:00( Edit History Discussion )

Bill Nelson: and we nee industry out of the darkness of the shadows and into the full light of day. mr. present, i'm going to make some additional statements. i'd ask that that be put in the record. mr. president, i would ask that

2:27:01 to 2:27:21( Edit History Discussion )

Bill Nelson: the transcripts of last sunday's "60 minutes" program on oil speculation be put in the record. the presiding officer: without objection. mr. nelson: and, mr. president, i ask that the full text of the bill that i have just announced to be filed be printed in the record. the presiding officer: without objection.

2:27:22 to 2:27:46( Edit History Discussion )

Bill Nelson: mr. nelson: mr. president, i just want to lines from this sunday interview on cbs news "60 minutes a representative of the

2:27:47 to 2:28:09( Edit History Discussion )

Bill Nelson: petroleum marketers association is interviewed, a mr. gill began. and he mr. gilligan. and he says -- quote -- "approximately 60% to 70% of the oil contracts in the futures markets are now held by speculative entities, not by the companies that need oil, not by

2:28:10 to 2:28:31( Edit History Discussion )

Bill Nelson: the airlines, not by oil companies but by investors that are looking to make money from their speculative positions." that's a representative of the oil companies that said that. furthermore, the investigative

2:28:32 to 2:28:53( Edit History Discussion )

Bill Nelson: reporter, steve croft, states, "in a he quotes a fellow named michael masters michael masters, he said, said "the amount of money

2:28:54 to 2:29:15( Edit History Discussion )

Bill Nelson: institutional investors, hedge funds, and big wall street banks had placed in the commodities markets went from 3 billion to 00 billion. last year" -- continuing the quote, "last year 7 billion-- --correction "last year 27

2:29:16 to 2:29:38( Edit History Discussion )

Bill Nelson: billion barrels of crude being traded every day on the new york mercantile exchange for every one barrel of oil that was actually being consumed in the united states." that's mr. croft's analysis on "60 minutes."

2:29:39 to 2:29:59( Edit History Discussion )

Bill Nelson: and he was referring to a former wall street trader named michael masters. and then i want to end up by further quoting mr. croft from "60 minutes." "a recent report out of m.i.t. analyzing world oil production

2:30:00 to 2:30:20( Edit History Discussion )

Bill Nelson: and consumption also concluded that the basic fundamentals of supply and d been responsible for last year's run-up in oil prices." another quarter from an

2:30:21 to 2:30:43( Edit History Discussion )

Bill Nelson: intervee. interviewee." from quarter number four of 2007 until the second quarter of 2008" -- that's a six-month period -- "the energy information administration said that supply went up -- worldwide supply went up and worldwide

2:30:44 to 2:31:05( Edit History Discussion )

Bill Nelson: demand went down. and this was the period of the spike in oil prices so that you had the largest price increas in history during a time when actual demand was going down and the supply was going up during

2:31:06 to 2:31:27( Edit History Discussion )

Bill Nelson: that same period. the only thing m that makes sense that lifted the price was investor demand." in other words, the speculators making an artificial demand. and so i think it's clear and

2:31:28 to 2:31:48( Edit History Discussion )

Bill Nelson: that's why i'm introducing this legislation, and i look forward with great optimism to the passage of this kind of legislation mr. president, i have four unanimous consent requests more the committees to meet during today's session of the senate. they have the approval of the

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Bill Nelson: majority and minority leaders. i ask unanimous consent that these requests be agreed to and that these requests be printed in the record. the presiding officer: without objection.