News Releases for May 2008
May 02, 2008
For further information, please Contact the Governor's Office
Hoeven Calls On Administration, U.S. Sec. Of Energy, CFTC To Investigate Oil Market Speculation
Also Asks Administration To Suspend Additions To Strategic Petroleum Reserve
Letter to U.S. Energy Secretary Samuel Bodman 
(640kb pdf)
BISMARCK, N.D. - Gov. John Hoeven today called on U.S. Energy Secretary Samuel Bodman, the Commodity Futures Trading Commission and the Administration to investigate, and take regulatory action in response to, speculation in the crude oil market by large hedge funds and financial investment firms. Hoeven said the federal government should look into whether manipulation in the futures market is resulting in higher prices for consumers at the pump. In addition, Hoeven asked the Administration to declare a temporary freeze on additions to the Strategic Petroleum Reserve until consumers see relief in the cost of fuel. Hoeven wrote:
“The impacts of rising fuel prices affect all sectors of our economy, from American consumers to farmers to businesses. Despite the fact that refineries this year are currently running at normal capacity, fuel prices have risen significantly in recent weeks due to the recent run-up in the price of crude oil, with the implication that other factors are coming to bear on the price of motor fuel.
“Although higher global demand and a weakened dollar are contributing to higher fuel prices in the short term, it appears that financial investment firms and big hedge funds are pouring billions of dollars into oil futures. This activity is creating a speculation premium that is driving up crude oil prices and increasing the cost of fuel at the pump for the American people.
“Mr. Secretary, I am asking that the Department of Energy and federal financial regulators investigate to determine if financial speculation or manipulation of the oil commodity markets is driving crude prices higher, and then to take appropriate regulatory action. In addition, we urge the Administration to impose a temporary freeze on adding to the Strategic Petroleum Reserve until we see some relief in fuel prices.
“In the long term, the solution to high fuel prices is increasing the domestic supply and processing of both traditional and renewable fuels, which has been the focus of our efforts in North Dakota. Since 2000, we have worked with our producers to boost production of crude oil in Western North Dakota by more than 50 percent, and we continue to increase production in new geologic structures, like the Bakken formation. In addition, we are aggressively working on four projects to build or expand refinery capacity, in addition to expanding pipeline infrastructure in the state to help increase supply.
“Again, Mr. Secretary, I ask you, together with federal financial regulatory agencies, to investigate and address oil market speculation or manipulation that is driving short-term oil prices higher. At the same time, we request that the Administration discontinue adding to the Strategic Petroleum Reserve to help take pressure off crude oil prices until our consumers, farmers, and businesses see some relief from high fuel prices.”
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