Lawmakers Offer New Plan to Curb Gas, Oil Price Volatility
In a move supported by both the New England Fuel Institute and the Petroleum Marketers Association of America (as part of an association of over 250 groups) new legislation has been introduced to solidly clamp down on the potential for excessive speculation in the oil markets. As noted by NEFI, the federal agency tasked with regulating the commodity derivatives already has broad authority to impose speculation limits under last year's new Wall Street Reform Law.The CFTC is expected to vote on a final rule on October 4, after eight months of delay, but a leaked draft of the proposed rules shows them to be watered down and regulators do not plan on imposing aggregate limits on speculation as a class of trader – a major priority for NEFI.
Bill Nelson (D-FL) and U.S. Rep Peter Welch (D-VT) and a handful of other lawmakers late yesterday filed a legislation on Sept. 21 that aims to drastically limit the ability of speculators to artificially drive up energy prices. Nelson was joined by Sens. Jay Rockefeller (D-WV), Bernard Sanders (I-VT) and Richard Blumenthal (D-CT) who co-sponsored the Senate version of the bill.U.S. Rep. Rosa DeLauro (D-CT) joined Welch on the House version.
Under the legislation, no single investor could hold more than 5 percent of the oil futures market thereby greatly reducing speculators ability to manipulate prices. And because more speculators have jumped into the oil flipping business, the bill caps the overall level of speculation in the market at its average over the most recent 25 years. The lawmakers say that could reduce present day levels of speculation by more than half.