U.S. Senator Susan Collins, Ranking Member of the Senate Homeland Security Committee, and Committee Chairman Senator Joe Lieberman (ID-CT) today held a press conference on Capitol Hill to unveil legislative proposals for discussion to address the high cost of energy and food. The Senators are calling for stronger oversight over speculation in futures markets, which they said is a factor that is driving up energy and food prices. The Senators also called for additional resources for the Commodities Futures Trading Commission (CFTC), which oversees futures contracts and investments. The Homeland Security Committee is scheduled to hold a hearing next week to discuss the issue and the proposals unveiled by Senators Collins and Lieberman today.
Senator Collins said, “The high cost of energy is largely responsible for the economic downturn. 80 percent of homes in Maine use home heating oil to heat their homes. Far too many Mainers don’t know how they will cope this winter.”
Senator Collins explained that the price of energy does not correlate with supply and demand, thus providing compelling evidence that additional factors such as excessive speculation by non commercial traders is playing a role in the spike of energy and food prices. She also explained that home heating oil dealers in Maine with whom she has spoken about this issue also agree.
Among the legislative proposals that Senators Collins and Lieberman unveiled were: increasing resources at the CFTC; imposing a cap on the share of total contracts for a particular commodity that can be held by groups of speculator investors; and disallowing “swaps” , or arrangements that enable large investors to avoid regulatory scrutiny of their trading.
Senator Collins explained that when the CFTC was created in 1976, the entity oversaw 37 million futures contracts. Last year, while the organization had 60 fewer employees than in did in 1975, it was responsible for 3 billion futures contracts.
Senators Collins and Lieberman said that the purpose of next week’s hearing will be to discuss the outlined proposals and draft comprehensive legislation in July after hearing comments and analyzing policy options.