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ACGA asks congress to curb rampant speculation in energy marketsRecently, American Corn Growers Association's President Keith Bolin sent a letter alerting Congress to the severe impact the energy crisis has had on farm families and other rural Americans. "Farmers, rural business and the agricultural sector are struggling under record-high prices for fuel, transportation and shipping. Congress can and should advance swift reforms that could help bring desperately-needed relief to the American people," said Keith Bolin. "Members of the House and Senate should not leave Washington for recess without passing this legislation." "No one is arguing against the supply and demand economics of oil," Bolin continued. "But today's wild swings in energy prices are not driven by traditional forces. Instead, they are, to a large degree, the result of opportunistic speculators who buy commodities with one thought in mind: to flip them for a significant profit. Multiplied many hundreds and thousands of times, this practice has driven the price of vital energy commodities higher and higher until it ultimately impacts the lives of all Americans." ACGA recommends that Congress reinstate the normal functions of a critical market, which includes five essential actions for reasonable and sensible oversight:
1. Re-establish strict position limits on energy commodities. Traders who fail to take physical delivery of a commodity, or who do not deliver a commodity they produce, would be subject to firm contract limits. 2. Close the so-called "London loophole." Foreign futures traders cannot be subject to significantly less regulation than their U.S. counterparts. 3. Regulate "swap trades." All trades in the over-the-counter, or swap market, must be subject to large-trader report requirements and position limits. 4. Eliminate the "Enron loophole." This is critical so that exempt commercial markets are no longer free from regulations that apply to commodity exchanges, such as the New York Mercantile Exchange. 5. Enforce transparency in all energy trading. Traders' positions in every market must be reported to the Commodity Futures Trading Commission based on where the trades occur and who does the trading. "These five steps will go a long way toward eliminating distortion and inflation in the energy markets and will supply critical information needed to detect and prevent market manipulation. Many of these provisions are already contained in the Stop Excessive Energy Speculation Act of 2008 (S. 3268), a bill currently under consideration in the Senate," said Bolin. Since 1987, the American Corn Growers Association has been America's leading progressive commodity association, representing the interests of corn producers in 35 states. The ACGA has worked tirelessly to enhance farm income and protect rural communities and recognizes that farmers here and abroad need to have the opportunity to be rewarded for their time, investment, and commitment to feeding the world. For additional information on this and other issues, please visit our website at www.acga.org. 8/11/08 Date: 8/5/08
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