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Wall Street Lobbies to Protect Speculative Oil Trades
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A growing number of members of Congress have reacted to public outrage over skyrocketing gasoline prices by introducing at least eight bills that restrict the ability of financial companies to buy futures contracts, disclose more about those investments or stiffen federal oversight of energy trades. Other legislation is in the works, congressional aides said.
Democratic lawmakers have been particularly outspoken. "There is a bubble of speculation on the oil commodity exchange that is also driving up the price of gas, and that has to stop," said Sen. Byron L. Dorgan (N.D.), a leader on the issue.
But some Republican lawmakers are also pressing for change. "At a time when American people cannot escape the direct impact that rising gas and oil prices have on their day-to-day lives, it is incumbent that we ensure that our energy futures markets are transparent and demonstrate supply and demand -- not manipulation by large institutional investors," said Sen. Olympia J. Snowe (Maine).
What's more, the ramped-up lobbying by financial services firms has provoked a counterattack by lobbyists eager for additional regulation of energy trading. Led by the Air Transport Association, the lobby for the airline industry, a newly formed coalition of energy users -- which includes truckers, farmers and consumer groups -- has been urging lawmakers to approve several bills that would limit speculative investments in energy.
But advocates for the financial industry insist these concerns are misplaced.
"Increasing regulation on what we do will not lower energy prices," said Greg Zerzan, head of global public policy for ISDA. The association, which represents all aspects of the multibillion-dollar practice of trading exotic financial contracts outside of formal exchanges, hosts a conference call every Friday in Washington to coordinate the activities of like-minded groups.
Its latest addition: the Financial Services Roundtable, the lobby for 100 of the nation's largest financial services companies. And now the Roundtable and ISDA are courting the nation's largest business federation, the U.S. Chamber of Commerce, to join their crusade. Chamber executives said they were seriously considering the alliance.
