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Posted by Monitor on June 22, 2008, 12:48 pm
Democrats offer another bill to curb oil speculation
Published: CNNMoney.com - Sunday June 22, 9:45 am ET
http://biz.yahoo.com/cnnm/080622/062008_speculation_legislation.html?.v=4
"Speculation," a dirty word across America as Wall Street traders take
the blame for record oil and gasoline prices, drew more attention
Friday from Congress as three Democratic House members introduced yet
another bill attempting to limit activity.
To underline his case, Rep. Bart Stupak, D-Mich., said speculators now
control 71% of oil on the market. That means only 29% control the
physical oil being traded, down from 61% eight years ago.
Stupak blamed loosely regulated trading markets with numerous
loopholes for the ease that traders have to buy and sell crude.
As a result, Stupak introduced legislation with the support of two
other Democratic Congressmen to close loopholes that allow oil to be
traded electronically in unregulated oil markets. The bill would also
regulate other methods that Stupak claims oil traders use to avoid
federal oversight.
"We can eliminate a major avenue that traders use to avoid oversight,"
said Stupak at a press conference Friday. "It's time for Congress to
close the Enron loophole and lower our gas and diesel prices by 50%."
Many in Congress have suggested that closing a provision in the
Commodity Futures Modernization Act of 2000 that critics call the
"Enron loophole," after the energy trading company whose bankruptcy
was the centerpiece of the corporate scandals early this decade. The
provision allows oil futures to be traded in markets outside of the
jurisdiction of the Commodities Futures Trading Commission.
Stupak, the chair of a House Energy and Commerce subcommittee, has
pledged to investigate regulation of speculation further in a hearing
on Monday.
Congress is currently awash in nine different bills - including
Friday's proposal - that attempt to limit the role of speculators.
Several have bipartisan support, but only one was co-sponsored by a
Republican.
Proposals have included requiring foreign exchanges to provide more
information about crude oil trades, limiting the number of contracts
speculators are allowed to hold, increasing the amount of money
speculators need to put up to buy an oil contract, and removing
speculators from the market entirely and limiting trade to just
producers and consumers.
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