Goldman Sachs Response to Congress Members' Claim Gas Prices Spiked by Speculators

March 5, 2012— -- Goldman Sachs responded to a request for comment on Commissioner Chilton of the CFTC referring to a report the company commissioned as showing that large speculation in oil futures markets can affect the actual price of oil by sending a statement from the independent authors of the report.

Here is the full statement:

"We do find that buying and selling in the oil futures markets exerts an influence on oil prices. Buying and selling is how information about current and expected future oil supply and demand conditions is transmitted through the market, allowing the oil market to adjust the oil price in order to balance supply and demand. This is how a market works. Commissioner Chilton characterizes this as "speculation", with the suggestion it is unrelated to supply and demand conditions in the oil market. We disagree. In our view, this is the mechanism by which the oil market becomes better informed and reaches a consensus on issues such as the likely impact of the improving world economic outlook on oil demand and the increasing tensions with Iran on crude oil supplies. To say that "speculation" is contributing to higher oil prices is no different than to say that oil prices are rising on the expectation that the improving world economic outlook will lead to more oil demand and that tensions with Iran could lead to a disruption in crude oil supplies."