At a June 23 hearing on oil market speculation, Chairman of the House Energy and Commerce Committee, John Dingell, (D-MI), said that lawmakers should consider a "full range" of options to curb oil market speculation. Dingell said that Congress should examine proposals to increase margin requirements to 50 percent from their current 5-7 percent levels, set position limits across all futures exchanges, block commodities investment by pension funds and bar investment banks from owning energy assets.
Rep. Bart Stupak (D-MI), Chairman of the Oversight and Investigations Subcommittee, which convened the hearing, recently introduced H.R. 6330, the "Prevent Unfair Manipulation of Prices Act of 2008," that would broaden the authority of the Commodity Futures Trading Commission (CFTC) to regulate energy transactions, and strengthen the enforcement authorities of the Federal Energy Regulatory Commission (FERC). Before the July 4 recess, House Democrats plan to vote on Stupak's bill. Sen. Maria Cantwell (D-WA) introduced a Senate version of the Stupak bill on June 23.
Sensing the pressure from lawmakers, the CFTC has announced it will expand its oversight of futures markets, and impose position limits on U.S. oil contracts traded in the ICE Futures Europe exchange, which is under British authority.
Many Democrats, however, and some GOP lawmakers say that the CFTC is not doing enough to curb speculative investing by pension funds, big banks and other investors that is inflating oil prices far beyond what the market price should be.
Morgan Meguire is watching this debate carefully, as its resolution could be a precedent for any carbon allowance markets created under a cap-and-trade bill and, perhaps, for Financial Transmission Credit markets, where speculators play a significant role.