ATA, 17 other groups urge immediate reforms to energy commodities market

Absent an immediate reform in the widely-speculative energy commodity futures markets, oil prices worldwide will continue to surge, clamping down even harder on the U.S. economy, 18 groups, including ATA, told lawmakers.

The Trucker News Services

6/13/2008

WASHINGTON — The American Trucking Associations joined 18 transportation-related organizations June 11 in sending a letter to congressional leadership urging immediate reforms to the energy commodities market to stop surging oil prices and prevent further decline in the U.S. economy.

In a letter sent to Senate Majority Leader Harry Reid, D-Nev., Senate Minority Leader Mitch McConnell, R-Ky., House Speaker Nancy Pelosi, D-Calif., and House Minority Leader John Boehner, R-Ohio, the group outlined recommended reforms that include closing all loopholes that allow institutional investors to avoid limits on the size of their investments; ensuring all energy traders are subject to limits imposed on U.S. exchanges; and increasing margin requirements and imposing appropriate disclosure and financial requirements on institutional investors.

“Record-high, irrational oil prices are smothering the American economy,” the group said in the letter. “While we all recognize that a commonsense, long-term energy policy is desperately needed in this country, given the grim statistics that are getting worse every day, Congress must find bipartisan, near-term solutions.

“Absent an immediate reform in the widely-speculative energy commodity futures markets, oil prices worldwide will continue to surge, clamping down even harder on the U.S. economy.”

The group told the lawmakers that in May, unemployment climbed again to 5.5 percent, the highest one-month spike in 22 years; many thousands more employees were laid off; commercial air service to 100 cities was completely eliminated or will be by year-end; businesses closed because they cannot begin to raise prices of goods enough to recoup surging fuel costs, and families chose between filling up their gas tanks or grocery carts.

The group said that leading energy experts across the country agree that recent, unprecedented jumps in crude oil prices are due, in large measure, to rampant speculation in the energy commodities markets.

“Just last Friday (June 6), when oil spiked by $10 per barrel, speculators traded 22 barrels of ‘paper oil’ for every single physical barrel of oil consumed,” the letter said. “Sophisticated ‘paper’ speculators who never intend to use the oil are driving up costs for consumers and making huge profits with little to no risk.”

Having abandoned the stock market, these aggressive traders are manipulating the energy market to their sole advantage, the groups told the lawmakers.

 “This country needs a fair, transparent and balanced energy commodities market, not one that is skewed to benefit speculators and institutional investors,” the organizations said in the letter.

The letter was signed by the following organizations: