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Klobuchar Calls for Strengthening CFTC to Crack Down on Energy Speculation

Cosponsors bill to toughen oversight of oil and gas markets

June 17, 2008

Washington, D.C. – Following a hearing of the Senate Agriculture Committee today, U.S. Senator Amy Klobuchar called for passage of legislation she cosponsored that would strengthen the power of the Commodity Futures Trading Commission (CFTC) to regulate national and international energy markets, where unsupervised speculation may be contributing to the unprecedented rise in oil and gas prices.

In one recent trading period the price of oil rose a record $16 per barrel in just two days, reaching $139 per barrel.

“When I was a prosecutor, we would say that you can have all the laws you want on the books, but you need people to enforce them,’’
Klobuchar said. “You have to follow the money if you want to find the bad guys.’’

Klobuchar is a cosponsor of the “Increasing Transparency and Accountability in Oil Markets Act,’’ which would give the CFTC additional staff and authority to supervise oil traders, commodity exchanges and energy markets.

Klobuchar, a member of the Senate Agriculture Committee, spoke at a hearing today to examine whether the CFTC has adequate capacity to regulate energy market speculation. At the hearing, CFTC Acting Chairman Walter Lukken noted that his agency’s staff has fallen by 12 percent, to near-record lows, while the volume of commodities trading has risen by 8,000 percent.

The proposed legislation would allow the CFTC to hire additional staff to detect and prevent market manipulation and excessive speculation. It also would close the “London loophole,’’ to stop traders from routing trades through overseas exchanges to avoid U.S. regulation, and would require dealers and traders to file more detailed reports on their trades. Finally, it would request a Government Accountability Office (GAO) study to see if existing international regulations are adequate to prevent the manipulation of oil prices.

“Middle-class families are being squeezed by unprecedented energy costs,’’ Klobuchar said. “The government needs to be vigilant to make sure that markets are working for consumers, not against them.’’

Last month, Klobuchar 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.



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