Democrats blame speculators for driving up oil prices

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.

But, congressman, you know it is the same type of people. You are OK when they do it with oil up or down. But you have a problem when they were driving it with stock as few years ago. You draw a distinction there, right? Don't mess with gas, right?

BECERRA: No, I don't want folks to game the system. I don't care who is and which direction.

(CROSSTALK) CAVUTO: But that is what traders do. But that is what traders do.

So when you argue they are gaming the system...


BECERRA: ... who are playing with the system in ways that are harming the consumers and this economic recovery, that I care about that --


CAVUTO: But let's say, in a most generous sense, you're gonna give them half the spike we have had. Then is it fair to say you and Congress are responsible for the other half of the spike by either being opposed to drilling or dragging your feet in support of possible fuels and the oil industry in favor of new flavors?


CAVUTO: Do you take -- all I'm asking is, let's assume that the oil speculators are greedy and nasty SOBs. Let's get that out of the way.

BECERRA: That's your assumption, not mine.

CAVUTO: Are you any less is what I'm saying -- are you any less to blame for what is going on?

BECERRA: Since President Obama took office, the fact is there are four times more rigs operating in the U.S. than when George Bush was in office.

We have more oil rigs digging -- drilling for oil in the United States than every other country in the world combined.


CAVUTO: But you are realizing that oil demand from abroad has gone down simply because we entered a long protracted recession.

BECERRA: Absolutely. That's correct.

CAVUTO: That is sort of like me bragging about losing weight on a diet because the refrigerator was locked.

BECERRA: That's right.


CAVUTO: Wait a minute. You are arguing that energy, our production is up in the face of a recession that would always make it seem like it is up.


BECERRA: What I am saying is that the president is trying to do everything he can to use one of the energy sources we have, oil.

People are accusing him of not doing enough to try to extract the oil we have. He is drilling -- or having our industry drill more for oil than George Bush did. And we are drilling -- using more rigs than any other country in the world combined.


CAVUTO: Wait a minute. Why is it, when he talks about wanting to open up, at most, another half a percent of the available oil deposits we have, and he says you cannot do anything beyond 2 percent because that is all what we have got, when he knows full well with fracking and other technologies, we could get significantly more, and he takes that off the table?


BECERRA: That is not off the table. That is not off the table.

CAVUTO: Wait a minute. How is that helping our energy equation?

BECERRA: Because the president has said we should take the all the above approach.


CAVUTO: Yes, he says that, but he is not doing it.

I just talked to a guy who I trust knows more about oil than you do. He says he is not doing it.

BECERRA: It's tough if I'm going to try to your question and you don't let me answer the question.

CAVUTO: But I have asked it four different ways and you haven't.


BECERRA: Well, you may not like my answer, but you should at least let me give you answer.


CAVUTO: Tell me he's doing it. Tell me how and where he's doing it.

BECERRA: You going to let me answer?

CAVUTO: Yes. Have at it.

BECERRA: The president has pursued a policy that is an all of the above approach.

In terms of oil, today, the United States of America is -- has four times more oil rigs drilling for oil today than when George Bush was in office. We have more oil rigs drilling for oil than every other country in the world combined. We are doing that.

We can go after the oil shale as well. We can go after natural gas. We can go after solar or wind.

CAVUTO: So, we have an oil guy on here, Congressman, who said the president lied about that, that that is not the case, that the oil drilling we see going on is a completion of permits granted from an extension away from the Bush administration, and that when it comes to looking at new opportunities in new areas, the president consistently opposes it and Keystone is only the latest example of that -- he is in the oil industry. He says it ain't happening.

BECERRA: We should pursue -- whether folks agree completely or not, I think everyone can agree that we should pursue every policy that lets us take advantage of every source of energy we can, and do it the most effective way we can. I think that is what the president is saying.


CAVUTO: Well, I know you are right, you are right. He is saying that.


CAVUTO: But I'm telling you, here is where you and I respectfully disagree. He ain't doing it. He's saying it, but he ain't doing it.

BECERRA: Well, the facts don't agree with you.


CAVUTO: I know the facts. I have the facts right in front me.

But it's all right.

BECERRA: And so that means you know the facts that there are more oil rigs drilling for oil today in the world than every other place in the world combined.

CAVUTO: Congressman, we're not going to talk in circles, but I thank you for coming on, I guess.

BECERRA: I thank you for having me.

CAVUTO: All right.

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