ARLINGTON, Va. -- The Petroleum Marketers Association of America (PMAA) earlier this week unveiled a nationwide campaign aimed at tightening a loophole in commodities regulation that allows speculative traders of oil to operate beyond the reach of federal oversight. "Congress recently passed legislation that will close the Enron loophole, and that will help reduce the influence that speculative traders have on the price of oil," Dan Gilligan, the president of PMAA, said. "But the foreign-markets loophole remains open, and speculators are still able to use it to drive prices beyond where they [image-nocss] should be in a normal, free-market situation. We are asking Congress to circle back and close the foreign-market loophole as well."The so-called foreign-market loophole, Gilligan said, allows energy commodities exchanges owned by other countries to conduct business in the United States free from the regulations must be observed by commodities exchanges owned and operated by domestic interests.For example, Gilligan said, the InterContinental Exchange (ICE), which is headquartered in Atlanta, allows trading of U.S. energy commodities through an exchange located in London, thereby circumventing U.S. oversight.Gilligan said that the PMAA has created a website, www.stopoilspeculators.com, to help consumers learn more about how speculators drive up energy prices by taking advantage of the foreign-exchange loophole and what they can do to help close it."We're not saying that foreign exchanges should not operate in the United States," Gilligan said. "We're simply saying that these foreign exchanges should have to play by the same rules that the American exchanges have to observe. It's only fair."Senators Carl Levin (D-Mich.) and Olympia Snowe (R-Maine) last week circulated a letter for signatures that will be sent to the Commodity Futures Trading Commission (CFTC), reported the most recent issue of the PMAA Weekly Review. This letter requests that the agency require the Intercontinental Exchange (ICE) to explain why its U.S.-based contracts should not be subject to the same level of oversight and transparency as is applied to fully regulated U.S. exchanges.The following senators have co-signed the letter: Barbara Boxer (D-Calif.), Maria Cantwell (D-Wash.), Susan Collins (R-Maine), John Kerry (D-Mass.), Diane Feinstein (D-Wash.), Amy Klobuchar (D-Minn.), Patrick Leahy (D-Vt.), Robert Menendez (D-N.J.), Patty Murray (D-Wash.), Bernie Sanders (I-Vt.), Jon Tester (D-Mont.), James Webb (D-Va.) and Ron Wyden (D-Ore.).The CFTC issues letters of no-action, which allows electronic exchanges operating within U.S. borders that trade West Texas Intermediate (WTI) crude oil contracts to operate without any oversight. Currently ICE operates free from federal oversight because of the letter of no-action. It is estimated that one-third of WTI contracts for U.S. delivery trade on ICE. The CFTC has until June 5, 2008, to respond to the letter. PMAA is currently working with the House on a similar letter.
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