Washington, DC—Senate Majority Leader Harry Reid made the following statement today in introducing the Stop Excessive Energy Speculation Act:
“Right now, Wall Street traders are raising gas prices with nothing more than the click of a mouse. Without regard for anything but their own profits, traders are bidding up prices by buying huge quantities of oil just to sell them at an even higher price.
“For nearly eight years, the Bush-Cheney Administration has turned a blind eye to this increasingly excessive speculation, which has driven oil future prices to record levels and directly contributed to soaring prices of gasoline at the pump. In fact, the former head of the CFTC’s trade division said speculation has increased the price of oil by as much as 50 percent.
“That is why Democrats have introduced legislation to curb excessive speculation and increase transparency and accountability in the oil and gas markets. This bill will address the rising cost of gasoline in the short-term, prevent Wall Street traders from gaming the oil markets and ensure that American consumers are paying a fair price at the pump.”
Democrats Are Cracking Down on Excessive Speculation in the Oil and Gas Markets
THE “STOP EXCESSIVE ENERGY SPECULATION ACT” STRENGTHENS CFTC, INCREASES TRANSPARENCY AND ACCOUNTABILITY IN OIL AND GAS MARKETS
Enhances the CFTC’s Resources and Authority. The bill authorizes the CFTC to hire an additional 100 full-time employees to detect, prevent, and punish price manipulation and excessive speculation. The bill also requires the CFTC to use emergency authorities to rapidly implement this act. [S. 3268, Introduced 7/15/08]
Eliminates Excessive Speculation By Those Not Trading Actual Physical Energy Commodities. The bill eliminates excessive speculation by changing the definition of “legitimate hedge trading” to include only those producers and purchasers of actual physical energy commodities, and places limits on trading by those who are not trading actual physical petroleum products. [S. 3268, Introduced 7/15/08]
Closes the “London Loophole” That Allowed Excessive Speculation Through Unregulated Foreign Exchanges. In order to stop oil traders from manipulating prices and speculating excessively through unregulated foreign exchanges, the bill forces U.S.-based oil traders to comply with U.S. trading regulations even when they are trading through foreign exchanges. [S. 3268, Introduced 7/15/08]
Increases Transparency in Over-the-Counter Trading. Currently, large institutional traders — like investment banks — can trade oil and gas contracts directly, without going through an exchange or intermediary. The bill requires institutional traders to provide more detailed and disaggregated reporting on their direct, “over-the-counter” transactions so that the CFTC can determine if price manipulation or excessive speculation is taking place. [S. 3268, Introduced 7/15/08]
Increases Transparency of Index Traders and Swap Dealers. The bill requires the CFTC to routinely collect detailed information from index traders and swap dealers. It also requires the CFTC to distinguish between index traders and swap dealers. Finally, it requires a review of CFTC’s trading practices to ensure that index traders are not adversely impacting prices. [S. 3268, Introduced 7/15/08]
Establishes Working Groups to Study the Domestic and International Energy Markets. The bill establishes working groups to study the long-term trends in the domestic and international energy markets including the impacts of institutional investing and speculative trading. [S. 3268, Introduced 7/15/08]
Directs the FERC to Study the Role of Financial Institutions in the Natural Gas Market. The bill directs the FERC to undertake a study of the role of financial institutions on natural gas markets to understand the impact of high futures prices on the winter heating season. [S. 3268, Introduced 7/15/08]