Cantwell: CFTC oil speculation plan may need strengthening

Sen. Maria Cantwell (D-Wash.), a leading Senate proponent of tighter energy market regulation, said through a spokesman Thursday that the Commodity Futures Trading Commission’s new proposal to rein in speculative trading is a step forward but too weak.

The commission on Thursday floated a draft plan that would impose aggregate limits on the number of futures contracts that traders may hold, a response to concerns that large positions amassed by hedge funds and other parties have added to price volatility.

“Large Wall Street firms reaped huge profits at the expense of energy consumers by taking excessively large speculative positions in energy futures markets.  Senator Cantwell has been calling for aggregate position limits since early 2008, and has introduced legislation to force the Commodity Futures Trading Commission to do this,” Cantwell spokesman John Diamond said in a statement to The Hill.

“While today’s proposal is a step in the right direction, we are concerned that the proposed limits may be too high to rein in damaging speculation in oil and gas markets.  The CFTC must set the limits at a level that does not allow excessively high speculative positions that ultimately harm energy consumers,” he added.

Bart Chilton, a Democratic member of the CFTC, said earlier today that the limits in the plan – which the agency will issue in draft form for public comment – may “err on the high side” but could be lowered if they are deemed ineffective.

Rep. Ed Markey (D-Mass.), chair of the Energy and Environment Subcommittee, called the proposal an important step toward curbing what he calls “excessive” speculation, but said he hasn’t yet digested the specifics of the plan.

“I will be carefully reviewing the details of the CFTC's proposed rules to make sure that they go far enough to protect the markets and energy consumers,” he said in a prepared statement.