Senator asks government to curb oil speculators

By Tom Doggett

WASHINGTON (Reuters) - U.S. Senator Bernie Sanders has asked the federal futures market regulator to crack down on speculators whom he blamed for pushing up crude oil and gasoline prices.

The price for crude oil topped $66 a barrel on Friday, up more than 70 percent since mid-January. The rising oil costs have been passed on to consumers in the form of higher prices for gasoline, jet fuel and other oil products.

Sanders said the jump in petroleum prices was not justified, given that global oil demand this year is forecast to post the sharpest annual decline since 1981 and petroleum inventories are at their highest level in years.

"While prices have gone down from their historic highs of last summer, there is mounting evidence that excessive speculation, not supply and demand, is the cause for the recent run-up in oil prices," Sanders said in a letter on Thursday to Gary Gensler, the new chairman of the Commodity Futures Trading Commission.

Sanders urged the CFTC, which oversees futures markets like the New York Mercantile Exchange, to use its emergency powers to ensure that oil and gasoline is accurately priced.

The agency has the authority to limit the number of oil futures contracts a trader can control, boost margin requirements and suspend trading altogether for some market participants.

"The increased price of oil and gas is already causing severe financial hardship for American families, truckers, small business, airlines and farmers, and it putting enormous strain on an economy already in the throes of a deep recession," Sanders said.

He said the CFTC should immediately classify bank holding companies, such as Goldman Sachs and Morgan Stanley, as speculators and impose strict contract position limits on them.

Sanders said such companies "should not be allowed to make windfall profits in the oil market when in one division their analysts predict that oil prices will skyrocket, thereby driving new buyers to make investments in oil futures, while in another division their traders harvest huge returns on their oil positions."

CFTC officials could not be reached for comment.

(Editing by Walter Bagley)