The Futures Industry Association today released the following statement expressing its opposition to S. 3268, the bill titled “Stop Excessive Energy Speculation Act” that is now pending in the U.S. Senate.
The Futures Industry Association agrees with the judgment adopted in recent congressional testimony by Federal Reserve Chairman Ben Bernanke: speculation is not the cause of high energy prices. Many Americans are suffering from the increased cost of energy. A comprehensive national energy policy is essential to reduce that suffering.Instead, the Democratic leadership in the Senate has introduced S. 3268. It is a mixed bag. While it mandates appropriate studies and it enhances energy market transparency, the bill has many provisions that would amount to liquidity-robbing, regulatory overkill. We fear that those provisions would undermine the bill’s own transparency goals, make hedging more expensive, drive energy market activity overseas and hopelessly complicate the regulatory mission of the Commodity Futures Trading Commission.
FIA would welcome hearings on S. 3268, similar to the three days of informative hearings that the House Agriculture Committee just conducted on this subject. Senate floor consideration of the measure at this time is premature. FIA understands that Congress wants to act. But as Chairman Bernanke pointed out earlier this week in testimony to the Senate Banking Committee, the surge in energy prices has been driven primarily by strong growth in demand and tight supply conditions, not financial speculation. In our view, action that contradicts Chairman Bernanke’s economic analysis risks shooting at the wrong target.
