Washington, DC – In the face of record energy prices, U.S. Senator Dianne Feinstein (D-Calif.) today urged the Commodity Futures Trading Commission (CFTC) to immediately provide detailed information to the Energy Information Administration (EIA) about speculation in oil markets.

Last week, in response to a question by Senator Feinstein, EIA Administrator Guy Caruso told the members of the Senate Appropriations Subcommittee on Energy and Water that his agency lacks detailed information from CFTC about speculation in oil markets, in order to quantify how much impact speculation has had on crude oil prices in the United States.

Senator Feinstein is fighting for more oversight of energy futures markets, and has introduced legislation to:

• Impose limits on speculation in energy futures markets by institutional investors:  Senator Feinstein recently introduced legislation with Senator Ted Stevens (R-Alaska), to require CFTC to impose the same position limits on institutional investors to which other investors now are subject.  This legislation (S.3131) would essentially level the playing field in energy futures markets.

• Require traders who trade U.S. energy futures on foreign exchanges to adhere to the same regulation and oversight as those who trade on domestic energy markets: Senator Feinstein has worked with Senator Carl Levin (D-Mich.) and others to author legislation that would give the CFTC clear authority over U.S. commodities traded on foreign exchanges. This legislation (S.3129) would close the so-called “London Loophole.”

Following is the text of the letter sent by Senator Feinstein to CFTC Acting Chairman Walter Lukken:

                                                           July 1, 2008

 

The Honorable Walter Lukken
Acting Chairman
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581

Dear Mr. Lukken,

I am writing to request that you immediately provide quality, detailed data on energy market speculation to the Energy Information Administration (EIA).  I understand that EIA requires this information in order to quantify how much impact speculation has had on crude oil prices in the United States.

On May 22, I requested that EIA attempt to quantify the degree to which changes in geopolitical instability, the decreasing purchasing power of the dollar, and increased oil market speculation have influenced crude oil prices in the United States.  On June 25th, EIA Administrator Guy Caruso testified before the Senate Appropriations Energy and Water Subcommittee that his agency has been unable to complete this analysis due in part to its inability to obtain useful information on speculation from the Commodity Futures Trading Commission (CFTC).  

In testimony before the Senate Judiciary Committee, executives from five of our nation’s largest oil companies testified that market fundamentals lead them to conclude that the price of oil should be between $40 and $80 per barrel.  Mr. Stephen Simon, a Senior Vice President at Exxon-Mobil, asserted that the additional $50 to $90 per barrel present in today’s price can be attributed to changes in geopolitical stability, the weakness of the dollar, and increased market speculation, but he was unable to provide statistical data to confirm this assertion.

As you know, the American people and the American economy are hurting in the face of the highest real price of oil in history.  This analysis will inform Congress as it works to alleviate the burden that currently faces the American people.  

Considering its great urgency, I hope that you will work with EIA to provide this analysis by the time Congress reconvenes in July.  I look forward to receiving an analysis that will allow us to better understand what is causing oil prices to rise.  If you have any questions regarding this matter, please do not hesitate to contact my office.