Mr. Gerry Ramm Senior Executive, Inland Oil Company Ephrata, Washington On behalf of the
Mr. Gerry Ramm Senior Executive, Inland Oil Company Ephrata, Washington On behalf of the Petroleum Marketers Association of America Arlington, Virginia
Testimony before the House Agriculture Committee United States House of Representatives Washington, DC July 11, 2008
Members of the committee, thank you for the invitation to testify before you today. I appreciate the opportunity to provide insight on the extreme energy crisis that could well cost human lives this winter. I am an officer of the Petroleum Marketers Association of America (PMAA). PMAA has communicated for the past three years on the urgency, and has specifically testified before Congress seven times, on the grave need to address this issue. Before I address the Foreign Board of Trade issue, PMAA recommends that Congress act IMMEDIATELY to end excessive speculation in the energy commodities market and if strong legislative action cannot be executed now, then CFTC needs to exercise its emergency authority. Specifically, CFTC must suspend speculative long positions for noncommercial traders until the market returns to functional behavior. Just yesterday, the price of heating oil on the futures market went up 16 cents. In my home of Washington State, diesel moved as much as 17 cents a gallon with no supply disruptions or any event that should have caused this. Excessive speculation on energy trading facilities is the fuel that is driving the runaway train in crude oil prices which has dragged with it every single refined petroleum product. Recently, several big oil executives testified before Congress that oil should be priced about half of what oil is today. Our marketers are facing a crisis due to the dramatic run-up in gasoline, diesel and heating oil prices and have lost faith in the ability to hedge for the benefit of their consumers. For that reason, PMAA implemented a Stop Oil Speculators campaign which is beginning to show up in gas retail stations and convenience stores across the country. First and foremost, there must be full market transparency. Over the last eight years, energy commodities have been exempt from federal oversight due to a series of legal and administrative loopholes. This has lead to excessive speculation being driven on exchanges that are not fully transparent and accountable to U.S. rules of law. Certain Foreign Boards of Trade that are operating here in the U.S. are virtually exempted from CFTC regulations. Because these are unregulated trades there is no record. If these trades were manipulative in nature, it would increase the cost to the American consumer, it would increase the cost of the commodity sold. Such trading would leave no public data and there would be no fingerprints. Why would the CFTC NOT want authority over the trading platforms that are operating within the U.S. and trading U.S. delivered commodities? In response to the comment that traders will simply move overseas, 20% of world consumption takes place here in the U.S. Foreign boards of trade need access to U.S. markets, as evidenced by the fact they sought no action letters issued by the CFTC.
PMAA supports efforts to increase domestic supply; alternative fuels and conservation which will help ease prices in the long term. However, time is running out. Our businesses are at risk and our consumers are hurting. Congress and the President MUST rein in excessive speculation which is driving gasoline and heating oil prices to levels that aren’t justified by supply and demand fundamentals. Again, until Congress can get a handle on the commodity markets, the Petroleum Marketers Association of America recommends that Congress act IMMEDIATELY to end excessive speculation in the energy commodities market and if strong legislative action cannot be executed now, then CFTC needs to exercise its emergency authority. Specifically CFTC must suspend speculative long positions for noncommercial traders until the market returns to functional behavior. If Congress does not take IMMEDIATE action to close all loopholes and apply aggregate position limits on control entities set by commercial hedgers and imposed by the CFTC, some people will not be able to heat their homes this winter and may freeze to death. Some people will lose their jobs because they can’t afford to drive to their jobs and Congress will not be able to say that they were not warned of this impending tragedy. PMAA strongly supports the free exchange of commodity futures on open, well regulated and transparent exchanges that are subject to the rule of laws and accountability. PMAA also supports consumers need to fuel their cars, buy food and heat their homes. Reliable futures markets are crucial to the entire petroleum industry and to consumers. Let’s make sure that these markets are competitively driven by supply and demand. Thank you again for allowing me the opportunity to testify before you today. I would be happy to answer any questions you may have at this time.