Witness Walter Lukken of the Commodity Futures Trading Commission (CFTC) testified before the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. Lukken tried to explain the multitude of issues contributing to rising oil, corn, and other commodity prices and what the CFTC is doing to address the problem. (more…)
Guy Caruso, Administrator for the Energy Information Administration (EIA), says that the EIA has the lead role in collecting and analyzing data concerning physical energy markets. However, the EIA there are important needs for improvement. Caruso explains that EIA is actively supporting efforts by the Commodity Futures Trading Commission (CFTC) to improve data on energy related financial derivatives. (1:09)
Acting Chairman Walter Lukken of the Commodity Futures Trading Commission (CFTC) says that the volume on futures exchanges has increased 8,000 percent since the CFTC began to function 33 years ago while staffing levels have decreased by 12 percent and that additional staffing is necessary to implement new initiatives. (0:56)
Rep. Tim Holden (R-Pa.) asks Acting Chairman Walter Lukken of the Commodity Futures Trading Commission (CFTC) if the CFTC has analyzed claims concerning what percentage of oil prices are due to speculation. Lukken responds that the CFTC’s economic staff does not know which economic models are being used in these studies and that nobody at the CFTC has found information supports these statements. (0:48)
The House Committee on Agriculture met to discuss the Commodity Futures Trading Commission (CFTC) and its role in monitoring oil prices. Rep. Jeff Moran (R-Kan.) said that speculation is a component of high oil prices but that speculation is being used as a scapegoat and preventing Congress from addressing other important issues.
Walter Lukken, acting chairman of the CFTC, said that the CFTC launched an investigation in December 2007 to monitor the oil prices, realizing that enforcement and regulation is imperative to the industry. According to Lukken, the CFTC has found that the cost of oil properly reflects supply and demand, adding that the CFTC is unable to find evidence supporting claims that speculation is driving up prices at the pump. Lukken said he welcomes evidence showing why oil prices should be lower than they currently are.
Lukken also said that the CFTC is able to monitor a complex market despite being understaffed. He stated that the CFTC has asked for $27 million dollars in order to increase its staff to historical levels. Lukken told the committee that the CFTC has seen an 8,000 percent increase in activity and will be unable to sustain itself without additional employees.
Lukken expressed support for the Farm Bill, saying that the CFTC is working to comply with it and asking Congress to allow its implementation before revising it. Lukken also said he is confident that the Farm Bill has closed the “Enron Loophole,” a loophole that allows for exchanges made electronically to circumvent US regulation.
The Senate Committee on Homeland Security and Governmental Affairs met to discuss financial speculation in commodity markets and to hear statements as to whether or not investors and hedge funds are causing inflated food and energy prices. Witnesses discussed their findings on the influence of speculation on the global rise in commodity costs. (more…)
