ATA Tells Congress Energy Commodity Markets Need Greater Oversight

WASHINGTON, Feb. 3 /PRNewswire-USNewswire/ -- The federal government must ensure the transparency of energy commodity derivatives markets and establish aggregate position limits across all trading platforms, including over-the-counter markets and foreign exchanges, said Con-way Inc. Vice President Randy Mullett today during a press conference on Capitol Hill.

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Speaking on behalf of the American Trucking Associations, Mullett said that "while we cannot quantify the extent to which excessive speculation is responsible for the recent dramatic increases in the price of crude oil, we believe that it is a significant part of the problem."

In the past year crude oil inventory was well above average, global demand remained weak and the dollar declined by only 8 percent relative to the Euro, yet the price of oil has almost doubled. "In the face of these market realities, excessive speculation is the only other variable left unaccounted for," said Mullett.

The dramatic rise in diesel fuel prices and volatility combined with the soft demand for freight transportation services have left many trucking companies struggling to survive. Diesel fuel is the second-highest expense for most trucking companies.  Every one-cent increase in the price of diesel costs the trucking industry an additional $340 million a year.

"The Commodity Futures Trading Commission (CFTC) has taken an initial step in proposing position limits for energy trades on certain commodities exchanges; however, this step by itself is insufficient to curb the problem of excessive speculation," said Mullett. "Congress must act to broaden the CFTC's authority and eliminate trading loopholes. The failure to apply position limits across all trading platforms creates a loophole that permits excessive speculation beyond the control of government regulators."

Also speaking at the press conference were U.S. Sen. Maria Cantwell (D-Wash.) and the following representatives of the Derivatives Reform Alliance (DRA):

• Michael Masters, managing member, Masters Capital Management LLC
• Roger Johnson, president, National Farmers Union
• Paul Cicio, president, Industrial Energy Consumers of America
• Brother Dave Andrews, Senior Representative, Food & Water Watch
• Sean Cota, Cota & Cota, Inc., Bellows Falls, Vt.

The DRA includes members of the Commodity Markets Oversight Coalition and Americans for Financial Reform. These groups state that inadequate federal oversight and excessive speculation contributed significantly to the financial crises and commodity bubbles of the previous decade, and that meaningful reform is essential in order to return stability, confidence and transparency to the futures/derivatives markets and the broader economy.  Therefore, the coalitions urge federal lawmakers and regulators to consider much-needed reforms in the futures/derivatives markets.

The American Trucking Associations is the largest national trade association for the trucking industry. Through a federation of other trucking groups, industry-related conferences, and its 50 affiliated state trucking associations, ATA represents more than 37,000 members covering every type of motor carrier in the United States.

SOURCE American Trucking Associations