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Klobuchar Calls CFTC Energy Investigation a First Step

Says federal regulators must do more to increase vigilance over surging oil and gas prices

May 29, 2008

Washington, D.C. – One week after U.S. Senator Amy Klobuchar and other members of the Senate called for tougher scrutiny of oil and gas markets, the Commodity Futures Trading Commission (CFTC) disclosed today that it is investigating trading practices in world energy markets for possible manipulation that would drive up the price of oil.

Klobuchar last week joined Senator Maria Cantwell (D-WA) and 20 other senators in a letter to the CFTC asking that it intensify its oversight of energy markets and improve market transparency to ensure that manipulation of oil and gas markets is not artificially raising the price of oil and gas.

“With gas prices soaring to unprecedented heights and middle-class families feeling the squeeze, the government has a responsibility to make sure that markets are fair, honest and transparent,’’ Klobuchar said. “This is a good first step toward greater vigilance, but there is still much more the CFTC needs to do to protect American consumers.’’

In an unusual disclosure, the CFTC said today that it has been investigating the purchase, transportation and trading of crude oil and related derivative contracts for the last six months. The agency also said it has reached agreement with regulators in Europe for expanded information-sharing for surveillance of international energy commodity contracts with U.S. delivery points. The agency said it would also require more frequent reports from domestic energy traders to see how trading activity might be affecting prices.

Klobuchar noted that several energy industry executives have testified recently that ordinary market dynamics cannot explain the surging price of oil.

“According to the laws of supply and demand, they say oil should be selling for $55 a barrel,’’ Klobuchar said. “I want to know why it’s actually selling for more than $120 a barrel – and American consumers want to know too.’’

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