Washington (Platts)--9Jul2008

Lawmakers speaking before a US House of Representatives Agricultural
Committee hearing Wednesday generally agreed that excessive speculation should
be reined in, but each took varying approaches in their ongoing efforts to
bring energy prices down for consumers.

For one, Democratic Representatives Bart Stupak of Michigan, Chris Van
Hollen of Maryland and Rosa DeLauro of Connecticut outlined plans to close the
foreign board of trade loophole, or "London loophole," by giving the Commodity
Futures Trading Commission authority over foreign exchanges that operate
computer terminals in the US or trade US-based energy commodities.

Stupak also proposed the CFTC oversee all energy deals, including those
done over-the-counter or in bilateral markets. Van Hollen and DeLauro believe
the CFTC should remove energy from its roster of exempt markets, thus
subjecting energy trades to more extensive commission oversight.

Democratic Representative John Larson of Connecticut, meanwhile, would
exclude speculative players from unregulated markets by requiring OTC traders
to possess ability to take or produce the commodity they trade.

His legislation "allows speculators to continue to participate in the
existing regulated markets, where their activities can be conducted in the
light of day and are fully disclosed and subject to position limits and other
oversight measures followed by regulated exchanges," he said in prepared
testimony.

However, Chairman Collin Peterson, Democrat-Minnesota, expressed
skepticism that excessive speculation is necessarily behind the huge energy
and agricultural price increases of late.

"You may not like the fact that people are doing this, but that's a whole
other issue entirely," Peterson told Stupak. "I'd just like somebody to
explain to me...how they're affecting the price."

Bob Goodlatte, a Virginia Republican, disputed Stupak's assertion that
commercial hedgers represent only 30% of open interest in West Texas
Intermediate crude oil futures.

He said testimony slated to be presented by NYMEX President James Newsome
on Thursday contends hedgers make up around 65% of the crude oil market and
said noncommercial participation actually decreased this past year--even as
oil prices soared to record levels.

The committee will reconvene on Thursday and Friday to hear from various
stakeholders, including exchanges and end-user representatives, to discuss and
narrow down the various proposals to tighten the CFTC's control over
speculators.

--Jessica Marron, jessica_marron@platts.com