NEWS RELEASE
Committee on Energy and Commerce Democrats
Congressman John D. Dingell, Ranking Member

DINGELL COSPONSORS BILL TO SHINE SUNLIGHT
ON ENERGY DERIVATIVES

Representative John D. Dingell, Ranking Member of the Committee on Energy and Commerce, today announced that he co-sponsored H.R. 5248, the Prevent Unfair Manipulation of Prices (PUMP) Act, that will regulate over-the-counter trading of energy derivatives.

The New York Mercantile Exchange (NYMEX), which is regulated by the Commodity Futures Trading Commission (CFTC), is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy. It is subject to strict market integrity and price transparency regulation, but trading has increased sharply outside of official exchanges (see “Trading Frenzy Adding to Rise in Price of Oil,” New York Times, Saturday, April 29, 2006).

“Oil is a scarce commodity traded on global markets. Trading on regulated markets like NYMEX is transparent,” said Dingell. “The PUMP Act, which is sponsored by my friend and colleague, Representative Bart Stupak (D-MI), would turn the lights on in the murky world of over-the-counter trading in energy derivatives and make sure that speculators are held accountable if they engage in illegal manipulation.”

An editorial in the April 22, 2006 issue of The Economist noted the flood of new speculative investments in commodities, especially oil: “Speculators are thought to have put more than $100 billion into commodities markets in the past few years, helping to propel the price of oil ever higher. But this hot new money could quit the oil market in an instant, causing prices to plunge (and throwing the energy industry's investment plans into disarray).” Warned Dingell: “We would be ill-advised to ignore this volatile situation.”

The U.S. Government Accountability Office (GAO) is working on a report, due in September, examining, among other questions, how energy derivatives markets and market participants with different investment objectives influence energy prices.

“I look forward to the results of GAO's inquiry, but it is clear to me that Congress should include appropriate transparency and anti-fraud remedies in the current debate on energy policy,” said Dingell.

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