WASHINGTON, D.C. – Today, some Republicans in the U.S. Senate blocked attempts by Senator Maria Cantwell (D-WA) and her Democratic colleagues to pass a bill that would have immediately addressed rampant speculation in the energy futures markets.  The Energy Markets Emergency Act would have directed the Commodities Futures Trading Commission (CFTC) to invoke its emergency authority under the Commodity Exchange Act to ensure that the market price for energy commodities accurately reflects supply and demand forces.  Senator Cantwell believes, and is supported by many industry experts, that wringing out excessive speculation and possible manipulation in the oil futures markets could quickly bring down the world oil price to the marginal cost of production which the oil analysts believe is around $60 a barrel. 

 

Yesterday, the House of Representatives overwhelmingly passed the measure by a vote of 402-19.  Republicans in the Senate objected to passing the emergency measure, and attempted to attach an amendment to increase oil drilling and exploration in the outer continental shelf, which would do nothing to immediately bring relief to consumers at the pump.

 

"The U.S. Senate is about to take a holiday, but consumers don't get to take a holiday from high gas prices thanks to partisan bickering,” said Cantwell.  “Instead of supporting a measure that would have demanded the CFTC use its existing authority to rein in excessive speculation and eliminate any oil market manipulation, some Republicans put partisan politics first and now consumers and businesses will be left holding the bag.  American families and businesses can’t afford to wait another day, week, or month for their government to act and defend them from out of control prices, and burst the oil price bubble.”

 

The Energy Markets Emergency Act requires the CFTC to use its emergency authority to investigate excessive speculation within any market within its jurisdiction, effectively closing loopholes they may be utilized by bad market actors to exploit the oil futures market.  These loopholes include 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.  Under this bill, the CFTC must use its broad emergency powers authority to bring sanity back to the energy futures markets by investigating excessive speculation, liquidating positions, temporarily increase margins, setting stricter position limits, and limiting or suspend trading.

 

This bill was meant to serve as a tourniquet on the oil crisis Americans are suffering from until Congress returns from the July 4 work period to consider more comprehensive legislation to address out of control oil futures markets. On June 23, Senator Cantwell introduced the Prevent Unfair Manipulation of Prices (PUMP) Act which takes a comprehensive approach to address the loopholes that allow energy traders to evade federal oversight.  Upon returning from the July 4th work period, Senator Cantwell plans to immediately push for Senate consideration of the PUMP Act.

 

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.

 

 

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