For Immediate Release
July 30, 2008 |
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FOR MORE INFORMATION:
Cullen Schwarz
Office: 202.225.4961
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Republican Opposition Sinks Bill to Curb Oil Market Speculation |
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Bill Would Have Closed Loopholes and
Strengthen Regulation Agency to Ensure
Speculators are not Driving up Energy Prices |
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(Washington D.C.)- Legislation to strengthen market regulation to stop excessive speculation in the energy futures markets from driving up gas prices failed in the House of Representatives today. H.R. 6604, the Commodity Market Transparency and Accountability Act, would have closed loopholes that allow speculators to escape regulatory rules, increase market transparency and increase regulatory staff to fight market manipulation and fraud.
The bill was supported by a voted of 276-151, but did not pass as it was taken up under a procedure requiring 2/3 support for passage. A majority of Republicans voted to block the measure, just as they did last week when they opposed a measure to lower gas prices by releasing 70 million barrels of oil from the Strategic Petroleum Reserve.
“The impact of soaring oil costs on Michigan families is painfully clear,” said Rep. Levin. “Many experts agree that speculators are driving up the price of oil, possibly by $35 per barrel or more. The bill on the floor today called for common sense measures to stop speculators from artificially inflating oil prices, and I am disappointed the legislation did not pass.”
Speculators buy and sell futures contracts that require delivery of a commodity at a specified price on a specified future date. Rather than taking delivery of an actual commodity, traders often simply exchange the cash difference between the price of the commodity previously agreed to in the contract and the current price. Many oil speculators are betting that price of oil will increase, and experts say their trading is driving up the price in the market. Before 2000, an estimated 70 percent of the energy futures market trades were made by energy producing and using industries—only 30 percent by financial traders and speculators. Today, those numbers are reversed—and trading volume has increased six-fold. Since 2003, commodity index speculation has increased 1900 percent, from an estimated $13 billion to $260 billion invested.
The Commodity Market Transparency and Accountability Act would have:
•Further closed the “Swaps Loophole” (authored by Senator Phil Gramm, former chairman of Senator McCain’s presidential campaign) which allows speculators to avoid regulation by trading in unregulated, “over-the-counter” markets;
•Closed the “London Loophole” so that speculators would no longer be able to avoid U.S. limits on speculation that apply to U.S. exchanges by routing their trades through the London or other foreign exchanges;
•Imposed limits on the trading of energy futures contracts by speculators;
•Required the Commodity Future Trading Commission (CFTC) to obtain and publish better data on speculative trading in the futures market; and
•Required a minimum of 100 full-time CFTC employees to strengthen rule enforcement, prevent market manipulation and prosecute fraud. Despite record trading volume in the futures markets, CFTC staffing is at its lowest level in over three decades.
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To Contact Congressman Levin: -
Email Congressman Levin In Michigan: 27085 Gratiot Ave, Roseville, MI 48066 | (586) 498-7122 | (248) 968-2025
In Washington: 1236 Longworth House Office Building, Washington, DC 20515 | (202) 225-4961
