Oil Execs: What Do They Know?

Oil executives: “What do they know?”
The spectacle of an industry lobbyist decrying the prospects of increased regulation is very much dog-bites-man, as far as news value goes. But there’s something especially annoying about the comments made by John Damgard, the president of the Futures Industry Association, in a five-minute video snippet produced by the Financial Times.
n a response to a question about whether speculation plays a role in the current state of energy prices, Damgard blamed the current U.S. congressional focus on the issue as the result of the “silly season” of an election year, and offered some dire warnings as to what might happen should legislators be so foolhardy as to boost regulation
As Damgard very well knows, the question at issue is not the U.S. Congress’ interest in regulating markets in other countries, but in ensuring that commodity exchanges that operate in the United States conform to U.S. regulations. As extensively documented in congressional testimony two weeks ago by former Commodity Futures Trading Commission staffer Michael Greenberger, the United States currently allows exchanges owned by foreign interests to trade U.S. energy contracts on U.S. soil without having to report the full extent of that trading activity to U.S. regulators. This allows energy traders who wish, for whatever reason, to escape U.S. regulatory scrutiny, a safe haven for their activities.

Damgard’s not-so-veiled threat is that if the U.S. tightens its rules, traders will take their business elsewhere, but that ignores the reason that so many foreign-owned exchanges operate in the U.S. in the first place — there’s a lot of money to be made in the U.S. market. It’s just a guess, but a strong stance by the U.S. government on standards of transparency for energy trading might also prove popular elsewhere in the world, if prices continue to rise. I can’t imagine politicians in the U.K. are any happier with $135-a-barrel oil than they are in the U.S

Salon