Federal commission says it will enhance oil futures regulation

| 8/21/2009

A U.S. government panel, which oversees stock market trading that directly affects fuel prices at the pump, says it will work better with a related commission of the United Kingdom government to boost enforcement of energy futures rules.

The U.S. Commodity Futures Trading Commission announced Thursday it had agreed to strengthen cross-border supervision of energy futures markets, and was working closely with the United Kingdom’s Financial Services Authority.

The two agencies will work to boost surveillance over “linked energy contracts,” according to a statement from the CFTC.

“I believe that we must effectively utilize all existing powers to ensure that futures markets remain free of manipulation, fraud or other market abuses,” said CFTC Chairman Gary Gensler, in a statement. “Achieving this goal requires a coordinated international response. The CFTC will work closely with the United Kingdom’s FSA to respond to these challenges in a coordinated manner.”

During last year’s escalation of diesel and fuel prices, many oil futures experts said that the price per gallon of fuel was driven by traders who never actually took possession of a product. 

In July 2008, the U.S. Commodity Futures Trading Commission filed a civil suit against Optiver Holding, alleging the company manipulated the prices of crude oil and gasoline over 11 days in 2007 by “bullying” the price of oil upward to sell it at or near the close of the day’s trade.

Mike Joyce, OOIDA government affairs director, said truckers and all fuel users should respond well to the action.

“If there has been manipulation with the price of oil, and it’s been shown that there has been manipulation by commodity traders, then this action by the CFTC and the UK Financial Services Authority is welcomed by those of us that actually consume diesel fuel,” Joyce said. “The government should certainly reign in those manipulative activities and hopefully bring some stability to the price of oil related to supply and demand, not just speculation.”

– By Charlie Morasch, staff writer