The Petroleum Marketers Association of America and the New England Fuel Institute issued a statement on April 12 in response to President Obama’s proposals to address oil market manipulation and speculation:
On behalf of our members and their consumers, we applaud the President for his statement today regarding the need to step-up efforts to address the harmful effects of excessive speculation in the energy commodity markets. His statements are long overdue and are encouraging, especially considering the harmful effect that unchecked financial activities have had on businesses, consumers and the broader economy.
Our member companies do not benefit from high oil, gasoline and home heating fuel prices. Unwarranted price spikes and extreme volatility driven by Wall Street trading activities diminish competition, increase hedging costs, strain lines of credit and, most importantly, create major burdens on small businesses and struggling families.
We agree with the President on the need to step-up oversight of the energy futures and swaps markets, fully fund the CFTC to put the cops back on the beat and increase the penalties for market manipulation. Yesterday, we sent to the CFTC a comment letter (see link below) urging vigorous enforcement of the Volcker Rule, which would prevent banks from using customer deposits and taxpayer subsidies to speculate in commodities. Combined with strong new speculative position limits and margin requirements, federal regulators can get speculation back in-check.
The President should also remove any and all federal barriers to increased domestic production of conventional fuels such as crude oil and alternatives such as biofuels. Increased production and investments in infrastructure, when combined with renewed transparency and restrictions on speculation in the commodities markets will translate into real relief for American consumers and the broader economy.
In related news, NEFI is pushing industry members to oppose new legislation that would jeopardize much needed oversight and regulation of the derivatives markets and roll back vital reforms included in the 2010 Wall Street reform law.
There are several bills now being considered. One of those bills, the ‘Swaps Jurisdiction Certainty Act” or H.R.3283, would create a new loophole that would exempt U.S. financial firms from federal oversight and regulation if they engage in swaps with a foreign entity.
The ‘Swaps Execution Facility Act” or H.R.2586 would repeal pre-trade transparency requirements and as a result strip the markets of much-needed competition, blind end-users to competitive prices and drive up hedging costs.
More information and an e-mail form letter can be found at the NEFI Action Center (www.nefiactioncenter.com).