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Senate Republicans Block CFTC Emergency Bill

July 7, 2008
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Senate Republicans blocked a recent attempt by Sen. Maria Cantwell (D-WA) to win expedited approval of a bill that sought to wring out "excessive" speculation and possible manipulation in the energy futures markets that Democrats contend are responsible for record high crude oil prices, which eclipsed $143 a barrel early Monday.

Cantwell sought unanimous consent of the measure (HR 6377), which would have directed the Commodity Futures Trading Commission (CFTC) to invoke its emergency authority under the Commodity Exchange Act to ensure that the market prices for energy commodities accurately reflect supply and demand forces. The House passed the same bill in late June by a vote of 402-19 (see NGI, June 30).

Senate Republicans opposed the emergency measure, with Sen. Jeff Sessions (R-AL) attempting to attach an amendment to open the closed-off areas of the federal Outer Continental Shelf to oil and natural gas drilling. This prompted Cantwell to withdraw her motion.

The CFTC-related measure was meant to serve as a "tourniquet" on the current oil crisis until Congress can return from its Fourth of July recess to consider more comprehensive legislation to address the "out-of-control" oil futures markets, according to a Cantwell statement.

Cantwell said that upon returning from recess on July 9, she plans to immediately push for Senate consideration of her bill, titled "Prevent Unfair Manipulation of Prices (PUMP)," which seeks to close a number of loopholes that allow energy traders to evade federal oversight. Cantwell's PUMP measure proposes to close the so-called "Enron loophole," including bilateral "off-exchange" trades; the foreign board of trade loophole; energy swaps dealers loophole; and the bona fide hedging exemption loophole.

It also would require the CFTC to set aggregate position limits on energy futures contracts for a trader across all contract markets; would require public monthly reporting of index fund data for anyone trading U.S.-delivered energy futures contracts; and would protect and strengthen the authority given to the Federal Energy Regulatory Commission in the Energy Policy Act of 2005 to prosecute manipulation in natural gas and electricity markets.

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