After a three year battle by the New England Fuel Institute and a range of industry and coalition allies, Congress passed into law new legislation on June 18 that will finally bring much needed regulation to commodities trading by closing the “Enron Loophole.” Through the Enron Loophole, speculators were able to drive up oil prices by making trades via unregulated electronic channels. Some experts attribute the recent increase in energy costs to this and other loopholes in federal law.
Readers are advised that this is not a “magic fix” and will not result in immediate energy market relief. The federal government, through the Commodities Futures Trading Commission, must now enact the law through rulemaking, which may take as much as a year or more.
The New England Fuel Institute encourages industry members to contact the CFTC and urge them to quickly enact this new law and close the Enron Loophole as well as step up their overall “policing” of energy traders. This involves tough fines on any and all market manipulators.
CFTC can be contacted at (202) 418-5000 or e-mail CFTC Chairman Walt Lukken at email@example.com.
Speculators are still able to manipulate prices through the “Foreign Markets Loophole,” “The Swaps Loophole” and other abusive practices. Also, the CFTC is extremely underfunded, with only a fraction of the funding of its sister agencies that monitor the financial and stock markets.
Additionally, NEFI has announced a new site for this issue – www.stopoilspeculators.com. It provides more information about the remaining loopholes and an opportunity for industry members to state their opinions.