WASHINGTON - The chief federal regulator of U.S. oil contract trades announced yesterday steps to restrain price manipulation and excessive speculation that many experts believe are driving up gasoline prices.
Critics said the action, while welcome, should have come months ago. "Frankly they've waited far too long," said Mark Cooper, director of research for the Consumer Federation of America, a consumer advocacy group.
Testifying before the Senate Agriculture Committee yesterday, Cooper said that the rise in oil prices - about 39 percent this year alone - means that speculators are costing American consumers an estimated $1,500 per family in additional spending annually on gasoline.
The Commodities Futures Trading Commission - an obscure regulatory agency now in the global spotlight - announced the change in oil-trading regulations yesterday. The steps, while limited, would require buyers of U.S. oil contracts on the London-based Intercontinental Exchange (ICE) to abide by U.S. regulations for the first time. The exchange handles about 30 percent of such contracts.
Critics of the CFTC insist that the absence of reporting requirements has allowed traders in London to purchase more oil contracts than they could have in the United States and influence the prices for oil traded in New York and London. Large positions can be taken with few public details, and critics suspect collusion.
One such critic, Michael Greenberger, the CFTC's former director of trading under President Bill Clinton, said that yesterday's announcement was a good first step, but it still leaves the weaker British enforcement regime in charge of overseeing trades there rather than the full U.S. regulatory regime.
"They aren't applying the full weight of U.S. regulation to this institution [ICE]," which is owned by a group based in Atlanta, said Greenberger. He oversaw trading regulation at the CFTC from 1997 to 1999 and now teaches law at the University of Maryland.
Acting CFTC Chairman Walter Lukken defended his agency before the Senate Agriculture Committee. He noted the recent, rare acknowledgment that the commission been investigating oil price manipulation since December. Lukken also said his agency is mounting an exhaustive request for data from players in U.S. and foreign trading of oil contracts.