Statement of the Commodity Futures Trading Commission Re Closure of Natural Gas Price Spike Investigation

The U.S. Commodity Futures Trading Commission (CFTC) has completed its seven-month investigation of the sharp upward movement in prices in the natural gas market that occurred in late 2003. The CFTC’s investigation, which was initiated in early December 2003, did not uncover evidence that any entity or individual engaged in activity with an intent to cause an artificial price in natural gas in late 2003. According to the information obtained during the investigation, the increase in natural gas prices during that time was the result of distinct factors, including market reaction to colder than expected weather in the northeast United States during the first week in December 2003, and market statements and projections regarding the inventory of natural gas in underground storage caverns made in late November/early December 2003.

The CFTC’s investigation included the extensive review of documents and audio recordings produced by numerous companies and individuals in the natural gas markets, including physical and financial traders, industry analysts, and operators of natural gas storage facilities, as well as testimony and interviews of dozens of individuals.

The CFTC conducted its investigation in full cooperation with the Federal Energy Regulatory Commission (FERC). The CFTC’s investigative work was enhanced by the cooperative effort of the New York Mercantile Exchange.

“Under the Commodity Exchange Act, the primary and chief responsibility of the CFTC is to ensure that the markets that it regulates are free of manipulation and fraud. The CFTC recognizes that confidence in the natural gas markets is partially based on the timely flow of clear and accurate market information and looks forward to participating, along with other federal agencies and interested market participants, in the upcoming technical conference sponsored by the FERC. The CFTC’s interest is to ensure that the pricing of any contract is a function of market participants. The CFTC will continue to monitor market information and aggressively pursue any individual or entity that intentionally seeks to undermine the integrity of futures markets. I wish to commend the team of highly professional attorneys, economists and investigators who worked diligently on this investigation,” said Acting Chairman, Sharon Brown-Hruska.