U.S. Reps John Larson and Chris Murphy visited Hartford Wednesday to talk about Congress’s attempts to reign in oil speculation.
Larson called his Republican colleagues in the U.S House of Representatives “obstructionists” for attempting to defund the Commodity Futures Trading Commission, which was given more leeway by the 2010 Dodd-Frank bill to reign in price inflation caused by a rise in commodity speculation.
According to a White House Progress Report released Monday, U.S. crude oil production hit 5.6 million barrels a day in 2011, the highest level since 2003.
And for the first time since 1949, the United States is producing more than half of oil consumed. But despite these increases in production, prices have risen at the pump, a rise that Larson and Murphy say is because of speculation by Wall Street firms. Steven Guveyan, of the Connecticut Petroleum Council, disagrees.
“There is speculation in every market (think real estate 5 years ago in Nevada and Florida, as well as right now in both places). When prices are high, nobody wants speculators, when prices are low everybody wants them,” Guveyan said. “Oil prices today largely reflect actual supply and demand, not speculation.”
While Democrats in Congress attempt to curb speculation, Connecticut Republicans have rallied around a proposed bill by State Sen. Len Suzio, R – Meriden, has proposed a bill that would cap the state’s gross receipts tax as long as gasoline prices in the state are above $3 per gallon.
The gross receipts tax is equivalent to 7.53 percent of the wholesale price of gasoline, up from 2 percent from when it was established 30 years ago. The state also levies a 25 cent per-gallon gasoline tax, in addition to an 18 cent per gallon tax levied by the federal government.
“Democrat leaders have yet to schedule a public hearing on my proposal,” Suzio said. “The congressmen could directly help Connecticut motorists by helping me get tax relief passed at the state level.”
Suzio said that the impact of speculation on gasoline prices is greatly exaggerated by politicians who want to find a “scapegoat” for high gas prices “other than failed government policies.”
Growing demand in developing economies like China and India contributes significantly to rising prices, Suzio said.