U.S. Sens Dianne Feinstein (D-CA), Olympia Snowe (R-ME), Carl Levin (D-MI) and Maria Cantwell (D-WA) announced plans Tuesday to introduce the Oil and Gas Traders Oversight Act, which would require companies that trade in the electronic over-the-counter (OTC) energy trading business to keep records for five years on large trading positions and report those positions to the Commodity Futures Trading Commission (CFTC) or the Justice Department upon request.

The bill also would require persons in the United States who trade U.S. energy commodities on foreign futures exchanges to keep similar records and report large trades.

The bill is also cosponsored by Sens Barbara Boxer (D-CA), Russ Feingold (D-WI), Jeff Bingaman (D-NM), Joe Lieberman (I-CT), Frank Lautenberg (D-NJ) and Barbara Mikulski (D-MD).

“I’ve asked top federal regulators some tough questions about potential anomalies in natural gas pricing last year, but it will be hard to have much confidence in their conclusions if they remain blind to major segments of these energy markets,” said Bingaman, chairman of the Senate Energy and Natural Resources Committee. “This legislation will restore some consistency to the existing patchwork of market transparency rules, so consumers and businesses alike can have more confidence they are paying energy prices free from manipulation.”

The senators noted that similar requirements already apply to traders that do business on the New York Mercantile Exchange (Nymex).

Levin said market speculation and trading on unregulated exchanges are “fueling wild swings in energy prices that are harming U.S. families, businesses, and the economy as a whole. With an impressive array of industrial, consumer, and natural gas utilities supporting this legislation, and the new leadership in Congress, the signs are good that this Congress will finally enact legislation to close the Enron loophole, increase market transparency, and strengthen federal oversight of energy pricing.”

The senators said the legislation has the support of the American Public Gas Association, American Public Power Association, the Industrial Energy Consumers of America, the Petroleum Marketers Association of America, PG&E Corp., Sempra Energy, Southern California Edison and several other companies and associations.

Cantwell said by requiring traders to open their books “we can catch patterns of irregular trading, stop dishonest energy traders, and avoid a repeat of the western energy crisis.”

The senators also referred to Amaranth Advisers LLC’s downfall last September after the hedge fund announced that previously undisclosed speculation in natural gas trading had resulted in a loss of $6 billion. Among other clients who suffered massive setbacks, the collapse of the hedge fund reportedly cost the County of San Diego as much as $87 million in investments set aside for employee pensions.

In January, the CFTC announced that the Intercontinental Exchange, or ICE, the largest electronic trading company, has agreed to voluntarily provide information on OTC trades. This new legislation would “ensure that this reporting process becomes law, and therefore is not subject to an administrative decision within an individual company” (see Daily GPI, Feb. 1).

©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.