Wall Street Reform

As we went to press, a bill was working its way through Congress called the “Wall Street Reform and Consumer Protection Act of 2009.” One of the focuses of this legislation is to limit speculation in energy futures. Energy futures exchanges, which were created in 1982, are markets where energy contracts are traded on a daily basis. The most well-known exchanges are the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE). Contracts traded on these exchanges are denominated in 42,000 gallon (1,000 barrel) increments. Trading is never for the current month, only for future months.

More than 98% of the contracts traded are canceled without delivery ever being taken, yet these contracts have a profound and immediate effect on energy prices. Several years ago, when crude oil prices soared to $145 per barrel, some experts believed that 60% of the price was attributed to manipulative trading practices by speculators in the energy futures markets.

As a petroleum marketer, we are very concerned about the impact that energy futures trading has on the price and the volatility of petroleum products. A multi-industry coalition of businesses, labor groups and associations, including airlines, trucking and fuel dealer associations, have banded together in an attempt to get Congress to limit energy speculation to support responsible energy prices.

You can help us reign in the speculators by visiting stopoilspeculationnow.com. This site contains the latest information about speculation in the energy futures markets. It also provides links and tools for you to contact your congressman and senators to indicate your support of legislation to prevent manipulation of energy prices.