U.S. Sen. Feingold: Feingold-backed effort to prevent energy market manipulation included in farm bill
5/6/2008 Contacts: Zach Lowe & Katie Rowley (202) 224-5323
Bipartisan effort would prevent energy market manipulation
Washington, D.C. – As American consumers face soaring gas and energy prices, U.S. Senator Russ Feingold (D-WI) announced today that legislation providing long overdue oversight of energy markets will be included in the final Farm Bill. Feingold pushed for the provision as part of a bipartisan effort, led by Senators Dianne Feinstein (D-CA), Carl Levin (D-MI), and Olympia Snowe (R-ME), to ensure federal oversight of the electronic trading of oil and gas. The provision closes a loophole, often dubbed the “Enron loophole,” that has allowed oil and gas traders to make electronic energy trades without federal oversight. The lack of oversight has led to market manipulation and speculation, which in turn has led to price distortion. The legislation would put in place protections for certain “over-the-counter” markets similar to the ones used by the New York and Chicago Mercantile Exchanges. While the Farm Bill Conference Report has yet to be finalized, the “Enron loophole” provision has been completed.
“It is past time to prevent market manipulation by energy traders,” Feingold said. “Energy market speculation has a lot to do with the price of gas and Congress must act immediately to close a loophole to ensure there is proper oversight of energy trading. We can not allow energy traders to secretively bid up the price of oil and saddle Americans with the price at the gas pump.”
Since 2003 Feingold has worked to close the “Enron loophole” that has been exploited by energy traders operating in an unregulated market. Feingold has been a cosponsor of the Oil and Gas Traders Oversight Act, sponsored by Senator Feinstein that has now been incorporated into the Farm Bill. The provision in the Farm Bill will prevent market manipulation by requiring large trades to be reported and publishing price and trading volume of energy on a daily basis. The provision will also monitor trading, limit the size of trader positions, and establish an audit trail by collecting records of trading activity. “If this energy loophole is not fixed we will not be able to determine if American consumers are paying a fair price for energy,” Feingold said.
In a February 2008 letter urging inclusion of the Senate-passed provision in the final Farm Bill, Feingold and others stated, “With energy prices at or near record high levels, farmers and foresters are struggling to fill their tractors, heat their homes, fertilize their crops, and transport their goods to market. It is critical that the Congress take advantage of this opportunity on the Farm Bill to increase transparency and reduce the threats of manipulation and excessive speculation that have plagued our energy commodity markets over the past several years.”
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