Congress announced an agreement on a final Farm Bill on May 8 that includes an act to reauthorize the CFTC, and one measure in the bill is turning up the heat on energy market regulation and the CFTC. In what some in the futures industry call a misguided attempt to lower oil prices, a measure by Senators Dianne Feinstein (D-Calif.) Carl Levin (D-Mich.) and Olympia Snowe (R-Maine) would increase transparency, create an audit trail, impose speculation limits and increase financial penalties for market manipulation and excessive speculation in the energy markets.
Sens. Feinstein and Snowe also wrote a letter to CFTC Acting Chairman Walt Lukken calling for more control in regulation of global energy markets, saying “we are not confident comparable regulation and monitoring of trading [in global markets] are robust enough to prevent manipulation in American oil markets.”
The Intercontinental Exchange issued a statement on the proposals, saying “hastily enacted legislation that seeks to alter well-established regulatory policy could greatly impair the functioning of commodity markets” and the proposed market limitations “would do nothing to lower, and may actually increase, oil prices.”
Futures Industry Association President John Damgard believes the proposals are an attempt to score political points. “This is typical election year politics,” he says. “I doubt that anyone expects this legislation to become law. I do find it disturbing, however, that lawmakers are blaming futures markets for high prices.”
