Thought this was interesting…received an email response to an online form I submitted to Washington Senator Patty Murray about oil prices:
Dear Ms. Retzlaff: Thank you for writing me about speculation in the energy market. It is good to hear from you on this important issue.
As you know, high oil prices are having a severe impact on families, businesses, and our entire economy. The price of crude oil has jumped from approximately $60 per barrel in early 2007 to more than $140 per barrel in July 2008, and prices remain highly volatile. This volatility and the increase in price have had a detrimental effect on many aspects of our economy, particularly impacting small businesses as well as on American families trying to budget their expenses.
Questions have been raised regarding whether excessive speculation by investors in commodity markets is contributing to the price volatility of oil. The federal government, through the Commodities Futures Trading Commission (CFTC), is responsible for oversight of commodities trading markets to prevent manipulation and excessive speculation from occurring. In the past few years, there has been a massive increase in the amount of trading activity that takes place on the energy futures markets. However, annual funding to support the CFTC’s has not kept pace with the increased market activity that it monitors. In addition, CFTC’s regulatory structure has not evolved and has become outdated in comparison to the growing complexity of today’s global futures market. These deficiencies are hindering the government’s ability to conduct oversight over market activity and properly regulate trading.
As a result, I have coauthored legislation with the Senate Democratic leadership to provide the CFTC with new authority and resources to curb excessive speculation. This bill, S. 3268, the Stop Excessive Speculation Act of 2008, would help the CFTC address its current challenges by strengthening its access to information on oil market trading, increasing its staff and resources, and closing existing loopholes that have been used to avoid regulation and transparency. In addition, S. 3268 would create working groups to investigate the markets and effects of speculation. These new regulations would greatly enhance the ability of the federal government to monitor energy market trading and stop illegal activity that could be inflating oil prices.
Enhancing government oversight of futures markets is key to ensure trading is adequately regulated. However, we must continue to develop a comprehensive energy plan that will decrease our dependence on foreign fossil fuels and allow for the transition into using clean, alternative forms of energy. Diversification of our energy supply is imperative to decreasing our dependence on oil and to averting future energy crises. As the 110th Congress continues I will work with my colleagues to pass legislation that will increase regulation over market speculation, further alternative energy development, and increase our energy independence. Thank you for sharing your thoughts with me, and please keep in touch.
I hope all is well in Issaquah.