WASHINGTON (Reuters) - The U.S. regulator that oversees futures markets, such as the New York Mercantile Exchange, would also have jurisdiction over the trading of new derivative contracts based on carbon emissions, under a new bill introduced in the House of Representatives.
The bill, sponsored by Representative Bart Stupak, comes as the House Energy and Commerce Committee aims to pass next week separate legislation that would cut U.S. carbon emissions linked to global warming and require companies to have permits to spew their emissions.
Stupak told reporters on Friday that the Commodity Futures Trading Commission should oversee the carbon derivatives market that will be created from the climate change bill to prevent speculators from manipulating the market.
“The carbon derivatives market should be based on a strong regulatory framework,” Stupak said. “The finite nature of carbon credits and absence of a physical commodity leave it particularly vulnerable to speculation.”
To avoid that problem, his legislation would allow the CFTC to regulate carbon derivatives as an energy commodity.
Stupak said he wanted his proposal to be included in the climate change legislation that the energy and commerce panel will vote on next week.
But the committee’s chairman, Representative Henry Waxman, has not promised he will alter the climate change bill to give the CFTC jurisdiction over carbon derivatives, Stupak said.
Stupak’s bill would also curb excessive speculation in existing energy markets by ending loopholes in federal regulations that allow some energy traders to evade government oversight.
Stupak has tried to impose his market reforms through almost identical legislation he previously sponsored in the House.
Stupak said that, while energy costs are down significantly from a year ago, the public, Congress and federal regulators should not become complacent, as another dramatic increase in petroleum prices would further devastate the already weakened U.S. economy.
For example, he blamed speculators for the recent jump in retail gasoline prices, which nationally soared an average 16 cents a gallon last week.
“Supply is at a 20-year high, demand is at a 10-year low,” Stupak said. “This cannot be explained by simple supply and demand. Speculators are driving these prices.”
Editing by Walter Bagley