The Solution

To lower oil prices for all Americans, we need to increase domestic supply, exploration, alternative energy sources and conservation. We also must protect bona fide speculation and hedging.

To address excessive speculation, Congress should promptly:

• Re-establish strict position limits on energy commodities - Position limits have existed since 1936 and work well at curtailing excessive speculation. Any trader not hedging with the intention of taking physical delivery of a related commodity must be subject to strict position limits.

• Close the "London Loophole" - Foreign Boards of Trade with U.S. terminals trading futures contracts that cash-settle against U.S. contracts should face the same regulations as U.S. exchanges. It is not fair for U.S. futures exchanges to face more regulation than their foreign counterparts trading in U.S. commodities.

• Regulate “swaps trades” – All trades in the over-the-counter (OTC) swaps market must be subject to strict position limits. It is unfair to exempt swaps dealers from the same regulations that other market participants face. Experts have estimated the size of the OTC markets to be nine or 10 times larger than the futures markets.

• Fully close the "Enron Loophole" - Current law allows certain commodity markets to operate with almost no government oversight even though they trade contracts that are essentially identical to those traded on fully regulated exchanges like the New York Mercantile Exchange. These "look-alike" contracts significantly impact the value of a commodity like oil and Congress needs to mandate that they all be traded on a transparent, regulated exchange.