End Excessive Oil Speculation Now Act of 2011 - Directs the Chairman of the Commodity Futures Trading Commission (CFTC) to establish speculative position limits: (1) in any registered trading entity on or through which crude oil, gasoline, diesel fuel, jet fuel, or heating oil futures or swaps are traded that are equal to the position accountability levels or position limits established by the New York Mercantile Exchange (Exchange); and (2) that are equal to the position accountability levels or position limits established by such Exchange upon the aggregate number or amount of positions in contracts based upon the same underlying commodity that may be held by any person (including any group or class of traders) for each month across specified contracts, transactions, and swap contracts.
Directs the Chairman to: (1) establish margin requirements of 12% for speculative swaps and futures trading in crude oil, gasoline, diesel fuel, jet fuel, and heating oil; (2) require each bank holding company, investment bank, hedge fund, or swaps dealer trading energy futures or swaps for its own benefit, or on behalf of, or as counterparty to, an index fund, exchange traded fund, or other noncommercial participant, to register with the CFTC as a noncommercial participant and be subject to position limits and margin requirements under this Act.
Exempts bona-fide hedge trading from such position limits and margin requirements.
Expresses the sense of Congress that, if finalized, the proposed position limits for derivatives that the CFTC included in a specified notice of proposed rulemaking do not fulfill the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act to diminish, eliminate, or prevent excessive speculation.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2328 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 2328
To require the Chairman of the Commodity Futures Trading Commission to
impose unilaterally position limits and margin requirements to
eliminate excessive oil speculation, and to take other actions to
ensure that the price of crude oil, gasoline, diesel fuel, jet fuel,
and heating oil accurately reflects the fundamentals of supply and
demand, to remain in effect until the date on which the Commission
establishes position limits to diminish, eliminate, or prevent
excessive speculation as required by title VII of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 23, 2011
Mr. Hinchey (for himself, Mr. Welch, Mr. DeFazio, Mr. Grijalva, Mr.
Olver, and Mr. Stark) introduced the following bill; which was referred
to the Committee on Agriculture
_______________________________________________________________________
A BILL
To require the Chairman of the Commodity Futures Trading Commission to
impose unilaterally position limits and margin requirements to
eliminate excessive oil speculation, and to take other actions to
ensure that the price of crude oil, gasoline, diesel fuel, jet fuel,
and heating oil accurately reflects the fundamentals of supply and
demand, to remain in effect until the date on which the Commission
establishes position limits to diminish, eliminate, or prevent
excessive speculation as required by title VII of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``End Excessive Oil Speculation Now
Act of 2011''.
SEC. 2. ELIMINATION OF EXCESSIVE OIL SPECULATION.
(a) Findings.--Congress finds that--
(1) the national average retail price for a gallon of
gasoline was $3.75 on June 8, 2011;
(2) increased gasoline prices are causing severe economic
pain to the American people;
(3) Congress has a responsibility--
(A) to ensure that gasoline prices at the pump
reflect the fundamentals of supply and demand; and
(B) to bring needed relief to consumers and
businesses of the United States at the gas pump;
(4) there is mounting evidence that the spike in gasoline
prices has--
(A) little to do with the fundamentals of supply
and demand; and
(B) more to do with Wall Street speculators
increasing oil and gas prices in the energy futures and
swaps markets;
(5) as of May 27, 2011--
(A) the supply of gasoline in the United States was
higher than it was 2 years ago; and
(B) the demand for gasoline was lower than it was 2
years ago when the national average for a gallon of
regular unleaded gasoline was $2.44 a gallon;
(6) on May 12, 2011, Exxon Mobil Chairman and Chief
Executive Officer, Rex Tillerson, told the Committee on Finance
of the Senate that oil should cost between $60 and $70 per
barrel, if the price of oil was based on supply and demand
fundamentals;
(7) on March 21, 2011, Goldman Sachs warned clients that
speculators were boosting crude oil prices by as much as $27 a
barrel;
(8) on March 25, 2011, Delta Airlines General Counsel, Ben
Hirst, said that the marginal cost of oil production is between
$60 to $70 a barrel;
(9) in the summer of 2008, when gas prices rose to over $4
a gallon, Saudi Arabian government officials told the Federal
Government that speculators were responsible for increasing oil
prices by about $40 a barrel;
(10) the Commodity Futures Trading Commission has the
authority to ensure that the price discovery for oil and
gasoline is based on the fundamentals of supply and demand,
rather than excessive speculation;
(11) title VII of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (15 U.S.C. 8301 et seq.) (and
amendments made by that Act) requires the Commission to
establish position limits ``to diminish, eliminate, or prevent
excessive speculation'' for trading in crude oil, gasoline,
heating oil and other physical commodity derivatives;
(12) as of the date of introduction of this Act, the
Commission has failed to impose position limits to diminish,
eliminate, or prevent excessive oil and gasoline speculation as
required by law; and
(13) the proposed position limits for derivatives that the
Commission included in the notice of proposed rulemaking
entitled ``Position Limits for Derivatives'' (76 Fed. Reg. 4752
(January 26, 2011)) are not scheduled to go into effect until
the first quarter of 2012, which would--
(A) occur on a date that is later than the
statutory deadline for the regulations; and
(B) fail to diminish, eliminate, or prevent
excessive speculation as required by the Dodd-Frank
Wall Street Reform and Consumer Protection Act (Public
Law 111-203; 124 Stat. 1376).
(b) Elimination of Excessive Oil Speculation.--
(1) Definitions.--In this Act:
(A) Bona-fide hedge trading; bona-fide hedge
transaction.--The terms ``bona-fide hedge trading'' and
``bona-fide hedge transaction'' means a transaction or
position that--
(i)(I) represents a substitute for a
transaction made or to be made, or a position
taken or to be taken, at a later time in a
physical marketing channel;
(II) is economically appropriate for the
reduction of risks in the conduct and
management of a commercial enterprise; and
(III) arises from the potential change in
the value of--
(aa) assets that a person owns,
produces, manufactures, processes, or
merchandises or anticipates owning,
producing, manufacturing, processing,
or merchandising;
(bb) liabilities that a person has
incurred or anticipates incurring; or
(cc) services that a person
provides, purchases, or anticipates
providing or purchasing; or
(ii) reduces risks attendant to a position
resulting from a swap that--
(I) was executed opposite a
counterparty for which the transaction
would qualify as a bona-fide hedging
transaction; or
(II) meets the requirements of
clause (i).
(B) Commission.--The term ``Commission'' means the
Commodity Futures Trading Commission.
(2) Duty of chairman of the commission.--Notwithstanding
section 2 of the Commodity Exchange Act (7 U.S.C. 2) or any
other provision of law (including regulations), not later than
14 days after the date of enactment of this Act, the Chairman
of the Commission shall unilaterally--
(A) establish 1 or more speculative position limits
in any registered entity on or through which crude oil,
gasoline, diesel fuel, jet fuel, or heating oil futures
or swaps are traded that are equal to the position
accountability levels or position limits, as
appropriate, established by the New York Mercantile
Exchange;
(B) establish 1 or more speculative position limits
that are equal to the position accountability levels or
position limits, as appropriate, established by the New
York Mercantile Exchange on the aggregate number or
amount of positions in contracts based upon the same
underlying commodity that may be held by any person,
including any group or class of traders, for each month
across--
(i) contracts listed by designated contract
markets;
(ii) with respect to an agreement,
contract, or transaction that settles against
any price (including the daily or final
settlement price) of 1 or more contracts listed
for trading on a registered entity, contracts
traded on a foreign board of trade that
provides members or other participants located
in the United States with direct access to the
electronic trading and order matching system of
the foreign board of trade; and
(iii) swap contracts that perform or affect
a significant price discovery function with
respect to regulated entities;
(C) establish margin requirements of 12 percent for
speculative swaps and futures trading in crude oil,
gasoline, diesel fuel, jet fuel, and heating oil;
(D) require that each bank holding company,
investment bank, hedge fund, or swaps dealer engaged in
the trading of energy futures or swaps for the benefit
of the bank holding company, investment bank, hedge
fund, or swaps dealer or on the behalf of, or as
counterparty to, an index fund, exchange traded fund,
or other noncommercial participant--
(i) register with the Commission as a
noncommercial participant; and
(ii) be subject to each position limit and
margin requirement under this subsection for
each position in a manner by which the position
is considered to be a speculative, proprietary
position of the bank holding company,
investment bank, hedge fund, or swaps dealer;
(E) take any other action that the Chairman of the
Commission determines to be necessary to eliminate
excessive speculation in the aggregate to ensure that
the price of crude oil, gasoline, diesel fuel, jet
fuel, and heating oil accurately reflects the
fundamentals of supply and demand; and
(F) ensure that each bank holding company, hedge
fund, investment bank, and swaps dealer that is engaged
in the trading of energy futures or swaps for the
benefit of the bank holding company, hedge fund,
investment bank, and swaps dealer, or on the behalf of,
or as counterparty to, 1 or more noncommercial
participants, abides by each position limit and margin
requirement under this subsection.
(3) Applicability.--Each position limit and margin
requirement under this subsection shall not apply to bona-fide
hedge trading.
(4) Adjustments.--Notwithstanding section 2 of the
Commodity Exchange Act (7 U.S.C. 2) or any other provision of
law (including regulations), the Chairman of the Commission may
adjust any position limit under this subsection to the extent
that the position of all noncommercial participants or
speculators (in the aggregate and measured on an annual basis)
shall not equal an amount greater than 35 percent of the
annual, aggregate position of all traders in such futures and
swaps market or markets for crude oil, gasoline, diesel fuel,
jet fuel, and heating oil trading.
(5) Sunset.--
(A) In general.--This Act, and the authority
provided under this Act, shall terminate on the date on
which the Commission imposes position limits to
diminish, eliminate, or prevent excessive speculation
as required by, and increased margin requirements as
authorized in, title VII of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (15 U.S.C. 8301 et
seq.) (and amendments made by that Act).
(B) Sense of congress.--It is the sense of Congress
that, if finalized, the proposed position limits for
derivatives that the Commission included in the notice
of proposed rulemaking entitled ``Position Limits for
Derivatives'' (76 Fed. Reg. 4752 (January 26, 2011))
are not sufficient to fulfill the statutory
requirements of title VII of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (15 U.S.C. 8301 et
seq.) (and amendments made by that Act) to diminish,
eliminate, or prevent excessive speculation.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Agriculture.
Referred to the Subcommittee on General Farm Commodities and Risk Management.
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