U.S. Congressman Sam Graves scored a major legislative victory for farmers, seniors and manufacturers this week. Graves was able to add language to the Commodity Futures Trading Commission (CFTC) reauthorization bill that will help prevent and punish traders for engaging in market manipulation on the natural gas market.
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“I don’t think traders in New York ought to be manipulating prices for a profit while Americans struggle to pay their heating bills,” said Graves. “It’s manufacturers, seniors and farmers who are being burned by artificially high natural gas prices.”
The key provisions of the language would:
a. Require the CFTC to review the factors that cause price movement in the event of significant and highly unusual change in the nature gas futures price.
b. Requires traders to maintain records of their contracts, agreements and transactions for 5 years. This provides a paper trail to track market manipulation.
c. Increases the civil and criminal monetary fines for manipulation or attempted manipulation from a maximum $500,000 to $1 million dollars. It also increases the maximum jail time from 5 years to 10 years.
Currently, natural gas heats about 55% of America’s households and makes up 70-90% of the production costs for nitrogen based fertilizer. As a result of recent increases in demand and price, many of the nation’s farmer have seen their fertilizer costs more than double, while those Americans living on fixed incomes-like many seniors-find themselves spending more and more of their limited income to heat their homes.
“Its common sense, bi-partisan legislation that will help bring some reliability to natural gas prices,” said Graves. “It is the only piece of legislation that can help bring prices down in the short-term.”
Natural gas accounts for more than 37% of industrial energy consumption. Since it is the cleanest burning fossil fuel, many industries switched to natural gas to comply with clean air laws and now are being squeezed by high energy costs. A recovering manufacturing sector is being hampered by soaring natural gas prices.
Graves has been the leading advocate in Washington for reigning in market manipulation. He held a hearing in March on the subject and sponsored this amendment. The CFTC reauthorization has passed the House Agriculture Committee and will now be scheduled for a vote by the entire House of Representatives.