Huntsman CEO charges manipulation in gas market

25 June 2007 22:59  [Source: ICIS news]

WASHINGTON (ICIS news)--Sharply higher prices for US natural gas are more the result of market manipulation than supply/demand fundamentals, Huntsman Company chief executive Peter Huntsman said on Monday as Congress began hearings on gas trading.

 

“It is time for the CFTC to finally listen to what some of us have been saying for years and stop protecting a racket that encourages secrecy, volatility and gas traders,” Huntsman said, referring to the US Commodity Futures Trading Commission.

 

Huntsman spoke as the Senate Homeland Security Committee opened hearings on “excessive speculation in the natural gas market”. 

 

That panel’s subcommittee on investigations issued a report earlier on Monday that found excessive speculative trading has disproportionately increased US gas prices and that more federal regulatory vigilance over gas trading is needed.

 

Natural gas is the principal feedstock for US petrochemicals manufacturing, and a four-fold increase in gas prices since 2000 has forced plant closures and the movement of more capacity offshore.

 

In addition to broadening the reach of CFTC regulatory authority, the Senate report also called for increased funding for the commission and recommended that the commission be authorised to collect user fees from market traders for part of its funding.

 

“The CFTC suffers from antiquated technology, shrinking staff and inadequate oversight resources,” said Senator Carl Levin (Democrat-Michigan), chairman of the subcommittee.

 

At Monday’s hearing, trade association officials representing chemical producers and other manufacturers called on Congress to increase CFTC regulation of gas trading.

 

Although he did not testify at the hearing, Huntsman welcomed chemical industry support for greater scrutiny over natural gas trading.

 

“It would be great to see our industry get behind the fact that we are dealing with gas prices being influenced by market manipulation far more than issues around supply and demand,” Huntsman said.

 

“I think this is the tip of the iceberg,” he said.

 

The Senate subcommittee is to hold a second day of hearings on the issue on 9 July.  The subcommittee report indicates that the Senate is already leaning toward increased federal regulation of gas trading.

By: Joe Kamalick
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