WASHINGTON, D.C. – Today, U.S. Senator Susan Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, joined a bipartisan group of Senators to discuss the Senate’s vote to close the “Enron Loophole,” which relates to the regulation of oil futures markets, and was included as a provision in the Farm Bill Conference Report.
The provision would establish much-needed federal oversight authority to detect and prevent price manipulation and to limit excessive speculation in U.S. electronic energy markets. Some experts believe that speculation in energy markets may add an additional $20-$25 per barrel to the price of oil.
Specifically, the bill would:
• Require electronic energy traders to provide an audit trail and record-keeping
• Monitor trading for market manipulation
• Impose firm speculation limits
• Double financial penalties for certain cases of market manipulation and excessive speculation
“The high price of gasoline, home heating oil, and diesel is creating a tremendous hardship for families, truckers, and small businesses,” said Senator Collins. “Many causes appear to have contributed to the sharp rise in oil prices and, as we first examined during an investigation by the Senate Homeland Security Committee two years ago, excessive speculation on futures markets may well be a contributing factor. Unfortunately, there is still a lack of publicly available data to track the effect of speculation on prices, and manipulation still could go undetected on certain electronic markets that have been unregulated. This legislation would expand the authority of the federal government to provide greater regulation and transparency to guard against price manipulation.”
Senator Collins noted that the Senate Homeland Security and Governmental Affairs Committee will hold an additional hearing to further investigate speculation in the commodity markets next week. This hearing will examine the impact of trading by institutional investors and hedge funds on food and energy prices.
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