06.23.08

Cantwell Continues to Push for Congress to Bring Down Prices at the Pump

Introduces Legislation To Rein In Out Of Control Oil Market Speculation And Expose Possible Manipulation

WASHINGTON, D.C. – As consumers continue to struggle with record high gas prices at the pump heading into the July 4th holiday, today U.S. Senator Maria Cantwell (D-WA), and several of her Senate colleagues, introduced legislation aimed at closing loopholes and reining in excessive manipulation, and possible manipulation, of the oil futures market. The Prevent Unfair Manipulation of Prices (PUMP) Act, is a comprehensive approach to address the loopholes that allow energy traders to evade federal oversight.  Senator Cantwell believes, and is supported by many industry experts, that enacting the PUMP Act into law will quickly bring down the world oil price to the marginal cost of production, which the oil industry and oil market experts believe is around $60 a barrel.    Congressman Bart Stupak (D-MI), Chairman of the House Energy and Commerce Subcommittee on Oversight and Investigations, introduced the bipartisan companion measure last week.
 
“Working families and businesses are overwhelmed with punishing gas, diesel and home heating oil prices that set record highs each week,” said Cantwell. “Americans are desperate for Congress to work together to get to the bottom of these crippling oil prices that cannot be explained by supply and demand fundamentals. For months, I’ve been calling on various federal agencies to act now and step up to the plate. I have reached across the aisle to the Republicans to join me, and today I am reaching across to the House. We urgently need to close the loopholes that may be allowing a few rogue traders to hijack the oil futures market and force Americans to pay nearly twice as much at the pump as they should. It needs to stop right now.”
 
“Excessive speculation in the energy markets is having a devastating effect at the gas pump that is rippling through our entire economy,” said Congressman Stupak. “The PUMP Act is the most comprehensive bill proposed to close off the loopholes that allow speculators to manipulate energy prices. I appreciate Senator Cantwell's leadership in introducing this bill in the Senate and in helping to build support in both chambers of Congress to close off these loopholes and provide immediate relief from high energy prices.”
 
The PUMP Act would:
  • Close All Oil Futures Market loopholes: Completely closes the full ranges of loopholes being used by oil market speculators and dark market exchanges, including the so-called “Enron loophole” including for bilateral “off-exchange” trades; the foreign board of trade (FTOB) loophole; energy swaps dealers loophole; and, the bona fide hedging exemption loophole.
  • Impose Aggregate Speculation Limits: Requires the Commodities Future Trading Commission (CFTC) to set aggregate position limits on energy futures contracts for a trader across all contract markets. In doing so, the CFTC will be able to better prevent traders from amassing excessively large positions in a commodity across exchanges in an attempt to play one exchange off another.
  • Require Information on Index Funds: Requires public monthly reporting of index fund data for anyone trading U.S.-delivered energy futures contracts or trade on U.S. computer terminals on the CFTC’s website.
  • Strengthen Federal Energy Regulatory Commission (FERC) Authority: Protect and strengthen the authority given to FERC in the 2005 Energy Policy Act to prosecute manipulation in natural gas and electricity markets.
 
“It's time to shine some bright light into these dark markets and make sure all exchanges trading U.S. commodities are overseen by U.S. regulators. If we want to burst the oil price bubble and bring prices back to supply and demand fundamentals, we need to close all oil future market loopholes,” continued Cantwell.
 
For months, Cantwell has been working to bring more transparency and oversight over the oil and gas markets. In April she called on the Department of Justice to create an Oil and Gas Market Fraud Task Force to examine fraud and manipulation of oil and gas markets. She has repeatedly called on federal agencies including the Federal Trade Commission and the Commodities Futures Trading Commission to use their existing authority to conduct oversight over the oil and gas markets. Earlier this month, Cantwell chaired a landmark Senate Commerce Committee hearing which served to highlight many of the oil futures market loopholes addressed in the PUMP Act. On June 12, Cantwell introduced legislation with Senator Olympia Snowe (R-ME) to force the InterContinental Exchange Europe to register as a designated contract market (DCM) allowing the CFTC to directly regulate all U.S. oil futures markets and ensure they are subject to the same level of oversight and transparency.
 
 
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