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Washington, DC - Congressman Maurice Hinchey (D-NY) and Congressman Bart Stupak (D-MI) this week led a group of 20 House members in calling on the U.S. Commodities Futures Trading Commission (CFTC) to implement new rules that will safeguard the public from financial speculators who are artificially inflating the price of oil. In a letter sent to CFTC Chairman Gary Gensler, Hinchey and Stupak applauded the agency for working on a report that details how financial speculators have unfairly manipulated oil prices, but they encouraged the chairman to put safeguards in place now in order to protect the public from unnatural price fluctuations.
"For far too long, the American people have been forced to pay artificially inflated prices for gas and other oil products because greedy financial speculators have gamed the energy markets for their own profits," Hinchey said. "This manipulation of the energy market needs to stop and the CFTC has the authority to help bring this speculation game to an end. At a time when so many families in New York and across the country are trying to get by in very difficult economic times, the last thing they need is to be forced to pay higher prices at the pump because a multimillionaire oil speculator is trying to become a billionaire. The greed at the expense of the overall public must stop."
“It is encouraging to see the CFTC taking steps toward reining in excessive speculation in the energy markets,” Stupak said. “Under Chairman Gensler’s leadership, the CFTC has begun to address problems in our energy markets that Congress has been calling on the commission to look into for years. The fact that CFTC now acknowledges speculation plays a role in energy prices further confirms what energy market analysts, market experts and other government agencies have already found. As we in Congress continue our work on legislation addressing excessive energy speculation, the CFTC should utilize current authority to rein in excessive energy speculation sooner rather than later.”
Hinchey, Stupak, and their colleagues wrote to Gensler that the CFTC has the authority under the U.S. Commodity Exchange Act to implement strong protections that would safeguard against oil price manipulation.
The full text of the letter from Hinchey, Stupak, and their 18 colleagues to Gensler follows:
September 9, 2009
Mr. Gary Gensler
Chairman
Commodity Futures Trading Commission
3 Lafayette Center
1155 21st Street, NW
Washington, DC 20581
Dear Chairman Gensler:
We applaud your efforts to investigate the impact the financial speculators have on the price of oil and what steps the CFTC can take to protect consumers from unjustified swings in the price of oil. Recent media reports indicate that the commission will release a report in the near future that will acknowledge that actions by financial speculators played a significant role in the wild fluctuations in the price of oil. This is a welcome departure from the position of the previous administration that refused to act in a meaningful way to bring relief to American consumers from the high price of oil.
We believe it is clear that the CFTC has the authority to act under the U.S. Commodity Exchange Act (CEA) to implement strict and enforceable rules to protect consumers from the burden of "unreasonable fluctuations or unwarranted changes" in the price of a commodity such as oil. In fact, the CEA directs the commission to establish trading limits the commission deems necessary to "diminish, eliminate, or prevent such burden." Given the severe impact that oil price fluctuations have had on the U.S. economy and consumer, we strongly urge you to act quickly to adopt new rules that prevent financial speculators from wreaking havoc on our economy. Specifically, we support:
· Strict aggregate position limits across all energy products and markets for all index traders, swaps dealers and proprietary traders with limited exemptions for legitimate commercial hedgers with physical holdings;
· Strong transparency requirements on all "over-the-counter" (OTC) markets and requiring all OTC contracts to clear through a CFTC-regulated by invoking the commission's emergency authority to events that prevent "the market from accurately reflecting the forces of supply and demand;"
· Requiring swap dealers to provide daily data similar to the Large Trader Reports and ensuring that such data is properly integrated with the CFTC’s market monitoring software.
The time for action is now and we hope that the CFTC, under your leadership, will move quickly to adopt these recommendations. We must ensure that financial speculators who have no commercial interest in oil and gas contracts can no longer manipulate the energy markets and drive up the cost of oil for every one else.
Thank you for your consideration of this request. We look forward to hearing your response.
Sincerely,
Maurice Hinchey, Bart Stupak, and their 18 House colleagues
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