Speaking on behalf of the American Trucking Associations, Con-way Inc. Vice President Randy Mullett called on Congress Wednesday, Feb. 3, to improve transparency in the over-the-counter markets and establish aggregate position limits across all trading platforms during a press conference on Capitol Hill in Washington, D.C. Mullett also addressed the effects of excessive oil speculation on America’s trucking industry.
“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,” Mullett says.
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 almost has doubled, Mullett says. “In the face of these market realities, excessive speculation is the only other variable left unaccounted for,” he says.
In addition to Mullett, speakers at the press conference included U.S. Sen. Maria Cantwell (D-Wash.) and the following representatives of the Derivatives Reform Alliance (DRA):
- Michael Masters, Managing Member, Masters Capital Management;
- Roger Johnson, President, National Farmers Union; and
- Sean Cota, Cota & Cota, Inc., Bellows Falls, Vt.
The DRA is composed of members of the Commodity Markets Oversight Coalition and Americans for Financial Reform. These groups believe that inadequate federal oversight and excessive speculation contributed significantly to the financial crises and commodity bubbles of the previous decade, and believe 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 Commodity Futures Trading Commission has taken an initial step in proposing position limits for energy trades on certain commodities exchanges,” Mullett says. “However, this step by itself is insufficient to curb the problem of excessive speculation. 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.”