Reports Fuel Heated Battle Over Oil
The ongoing battle between Washington and Wall Street over what is fueling the volatile world oil market has heated up this week with the release of conflicting reports, Chief Investigative Correspondent Armen Keteyian reports.
In testimony before Congress today the head of the Commodity Futures Trading Commission (CFTC) again downplayed the role of financial speculators, telling a House Agricultural Committee the latest trading data shows they had no effect on the record rise in the price of oil.
"There doesn't seem to be strong evidence speculation, and in particular this index money, is driving up prices," Acting Chairman Walter Lukken told the panel.
Lukken's remarks come one day after an independent report charged that at the same time Congress was considering reigning in excessive speculation in the crude oil markets, financial speculators - including large investment banks and pension funds "began a mass stampede for the exits," nearly $40 billion worth - driving down the price of oil.
"It's clear what happened here is unbridled speculation," said Senator Byron Dorgan (D-North Dakota).
"For the people who say it's supply and demand," added hedge fund manager and report's co-author Michael Masters, "I say show us the evidence."
Master's report comes about two months after a government Task Force issued this "interim" report arguing just that-- citing "supply and demand" as the primary source behind surging fuel prices.
Several Senators blasted that report's timing as "suspicious." Coming, as it did, the same day the Senate was taking up legislation to curb excessive speculation - bills that, within days, narrowly failed in both the Senate and House.
It prompted the following reaction from one CFTC Commissioner:
Written Testimony Of Acting Chairman Walter Lukken
Commodity Futures Trading Commission 2008 Report
"I think it was political," Bart Chilton told CBS News in an interview. "I think it was put out at a time when the senate was debating a speculation bill in order to try and kill it, and i think that's unfortunate."
Sources tell CBS News the Task Force also failed to take into account data showing how at one major U.S. exchange the "Likelihood of Legislation" resulted in speculators getting out of the oil futures market in droves. Fueling a drop in oil prices from a record high of $147 a barrel in mid-July to about $100 today.
And while Lukken offered several recommendations designed to increase transparency and improve the accuracy of data, Chilton said they "don't go far enough" to curb speculative trading. "We need to have a sheriff in the saddle to make sure these markets are honest."
By Armen Keteyian