• With: Rep. Xavier Becerra

    This is a rush transcript from "Your World," March 21, 2012. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: As the president defends those policies, a group of senators today introducing a bill to end what they call the real reason for them, rampant speculation in the energy market, speculation that they say is driving gas prices higher than they should be.

    Among those supporting it, California Democratic Congressman Xavier Becerra.

    Congressman, good to have you back.

    REP. XAVIER BECERRA, D - CA: Neil, always good to be with you.

    CAVUTO: So, this reins in on speculators, right? And I guess you use the Federal Reserve study that says they accounted for 15 percent of the run-up we have seen in prices over these years, right?

    BECERRA: Forty to 70 cents of the price of gasoline probably is attributable to this gaming of the system.

    CAVUTO: Well, they didn't say that. They said 15 percent. I don't know where you factor in up to 70 cents. but let's say they're higher than a buck a gallon than where they were. Then they account, worst-case scenario, if you buy that, 15 cents. The other 85 cents, what is the reason for that?

    BECERRA: Fifteen cents per dollar, per dollar, per dollar.

    CAVUTO: But I'm saying, then, if that is the factor, the most generous assumption is that, where is the rest of it coming from? What is accounting for the run-up?

    BECERRA: Well, the run-up has been occurring for decades, Neil. We have known the price of gas has been going up for quite some time. But it is the rapid increase in the price of gas that has everybody worried and we experienced this four years, five years ago in 2008 with the rapid increase. And we knew that it was something other than supply or demand.

    Clearly, today, the demand is lower than it was before. Today, the supply is greater than it was before. There are not long lines at the gas station of folks waiting to fill up their gas tank.

    What it is, is that in the last several weeks, speculators have driven up the cost because of uncertainty going on around the world, whether it's the Middle East or elsewhere, and OPEC using its leverage as a monopoly, oligopoly, to try to control prices. So we know that there are folks who are gaming the system.


    CAVUTO: All right. You think you take them out of it, you don't gun the system. They can trade up or down. You can short a stock, too, you can take a stock and you can bet and make a wager that you think the price of the stock will go down. So, when they were making money in late 2007, these same nefarious types, gunning that the price of oil would go down, and that was exactly what was happening, I don't remember, maybe you did, but I don't remember you bemoaning that rundown in prices when those same speculators were gunning the direction back then.

    BECERRA: Neil, you are asking a nonsensical question. Do I mind if the price of gasoline goes down? Absolutely not.


    CAVUTO: No, no, no, you knew exactly what...


    CAVUTO: No, Congressman, you knew exactly what I was saying.


    CAVUTO: That you like it when it goes down. And that is fine. That makes perfectly good sense.

    BECERRA: Absolutely.

    CAVUTO: But speculators chase momentum one way or the other.


    CAVUTO: Wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait.

    BECERRA: Absolutely.

    CAVUTO: There are many CEOs out there who hate those who speculate against their stock and short their company stock and drive the price of the stock down.

    There are many who trade oil who resent when these guys come in and then gun the price down, which happens a lot. That is not forgiving what they are doing. You can argue they gun on the way up and they gun on the way down. But I'm just saying that you complain about prices going up, as you should, but I think you are pointing the finger at the wrong guys.

    BECERRA: I am not going to point it at the producers. I am not going to point it at the consumers. I am pointing it at the folks on Wall Street who are gaming the system, who are jacking up the price unnecessarily. And it is the consumers who pay, absolutely.

    And the commission...


    CAVUTO: But you don't mind -- no, that is fine. But you don't mind when those prices go down.


    BECERRA: I absolutely do not.

    CAVUTO: So, when Congress had a problem with the stock meltdown, people would were driving, swap derivatives and the like, driving down the markets because it was hurting stock prices, and that was going down, that was awful, that should be reined in, but when the same types of traders are doing this to energy, that is preferred, right?

    BECERRA: Neil, if folks are gaming the system and causing a lot of our manufacturers or producers to go out of business because they are driving the prices irrationally low, absolutely I'm concerned, absolutely.

    CAVUTO: I understand what you're saying.