Stupak Introduces Oil Futures Trading Bill
Stupak Introduces Oil Futures Trading Bill
Congressman Bart Stupak (D- MI) announced that he led 20 Democratic colleagues in introducing H.R. 5248, the Prevent Unfair Manipulation of Prices (PUMP) Act. The bill is aimed at better regulating the oil futures market.
"It has been widely reported that fear and greed in the oil futures market are driving crude oil prices to record levels," Stupak said. "This snowball effect occurs because so many futures trades are completely unregulated and unmonitored."
There are two types of oil futures speculation. Market trading takes place through the New York Mercantile Exchange and is overseen through the Commodity Futures Trading Commission (CFTC). However, most oil futures speculation occurs "over-the-counter." This speculation is conducted off of the market, without any regulation or oversight by the CFTC.
The 20 other Democrats cosponsoring Stupak's bill include Representatives John Dingell (MI), John Larson (CT), Jerrold Nadler (NY), Carolyn McCarthy (NY), Maurice Hinchey (NY), Brian Baird (WA), Grace Napolitano (CA), Ben Chandler (KY), Allyson Schwartz (PA) , John Tierny (MA), Jay Inslee (WA), Cynthia McKinney (GA), Thomas Allen (ME), Al Green (TX), Peter DeFazio (OR), Lois Capps (CA), Bill Pascrell Jr. (NJ) and Lloyd Doggett (TX).
"Because these over-the-counter trades are unregulated, the exact volume of trading is unknown," Stupak noted. "It is almost impossible to determine the true impact speculators have on oil and gas prices."
Stupak's bill would require over-the-counter speculators to report to the Commodity Futures Trading Commission, just as on-market traders already do. This increased oversight would improve confidence in the market and help eliminate the unreasonable inflation of crude oil prices. The legislation would also increase penalties for speculators found to be unfairly manipulating the oil futures market.
"Some economists attribute as much as $20 in the price of a barrel of oil to futures speculation," Stupak said. "This bill is designed to bring crude oil prices in line with market realities, not speculation and fear. We could reduce the cost of a barrel by as much as $20, lower the price by 30%, if Congress would enact our legislation."
http://www.house.gov/apps/list/press/mi01_stupak/042806PUMPIntroduction.html