WASHINGTON – Congressman Bart Stupak (D-MI) announced that he re-introduced this week legislation aimed at better regulating the multi-billion dollar energy derivatives market. 

“At least half of this vast futures market operates without transparency and without oversight,” Stupak said.  “Speculation and market manipulation in the energy futures market can create a snowball effect and consumers ultimately pay the price when they are heating their home or putting gas in their car.” 

There are currently two types of oil futures trading.  Market trading takes place through the New York Mercantile Exchange (NYMEX) and is overseen through the Commodity Futures Trading Commission (CFTC).  However, most oil futures trading occurs “over-the-counter.” This trading is conducted off of the market, without any regulation or oversight by the CFTC.  According to some economists, 250 million barrels of oil are traded daily on NYMEX and at least that amount is also traded daily, “over-the-counter,” without any regulation or oversight.

“Oil price increases are based on speculation and fear, which fuels greed, and higher prices at the pump,” Stupak continued.  “Because these over-the-counter trades are unregulated, the exact volume of trading is unknown.  While it is almost impossible to determine the true impact speculators have on oil, gasoline and natural gas prices, some economists estimate that transparency in the oil futures market could reduce the price of crude oil by as much as $20 a barrel.”

Stupak’s bill, the Prevent Unfair Manipulation of Prices or PUMP Act, would require over-the-counter traders to report to the Commodity Futures Trading Commission, just as on-market traders already do.  This increased oversight would improve confidence in the market and help eliminate the unreasonable inflation of crude oil and other energy prices.  The legislation would also increase penalties for speculators found to be unfairly manipulating the oil futures market. 

The PUMP Act has been cosponsored by 18 other Representatives, including the Chairman of the House Energy and Commerce Committee, John Dingell (D-MI).  Stupak also introduced the bill last Congress, when gasoline prices had soared to record levels.

As the newly elected Chairman of the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee, Stupak has pledged to make energy issues a key focus of his Subcommittee’s work in coming months.