Oct. 6, 2004
Public Citizen to Urge Congress to Restore Accountability in Gas Market
Wenonah Hauter, Director of Energy Program, to Testify Today Before Senate Subcommittee
WASHINGTON, D.C. – Congress must protect consumers from abuses by natural gas companies that manipulate energy trading markets to jack up prices, Public Citizen will tell lawmakers today in testimony before the Senate Subcommittee on Competition, Foreign Commerce, and Infrastructure at a hearing on the near- and long-term forecasts for domestic natural gas supplies and prices. The national consumer group will call on Congress to curb energy companies’ egregious behavior and point to the fact that natural gas companies have paid $2 billion to settle allegations they manipulated natural gas markets in just the past two years.
Since 1999, natural gas prices for consumers have risen 155 percent, due in part to weak regulation of the industry. Despite the California energy crisis, which brought to light some of the fraudulent schemes that energy companies engage in to increase their profits, manipulation of the domestic natural gas market may be continuing to this day, said Wenonah Hauter, director of Public Citizen’s energy program.
Hauter’s testimony will also question the recent push to quickly establish sites for Liquefied Natural Gas (LNG) facilities, particularly due to the inadequacy of the federal government’s oversight of the process. To protect consumers from any future pricing abuses, Hauter will outline a 5-step reform plan to:
Re-regulate natural gas trading exchanges to restore transparency;
Order trading exchanges to reform natural gas trading price limits;
Establish a “just and reasonable” pricing standard for natural gas;
Mandate natural gas storage requirements; and
Improve local control over liquefied natural gas (LNG) siting.
“Considering the new breed of trader that is beginning to dominate these markets, it is prudent to enhance regulatory oversight over natural gas trading markets,” said Hauter. “Given the sheer size and political muscle behind these corporate players, greater transparency over their actions is needed now more than ever.”
Public Citizen has identified more than 200 hedge funds that have developed significant positions in natural gas trading markets. In addition, investment banks—led by Goldman Sachs and Morgan Stanley—have already firmly established themselves as dominant players in natural gas trading.
To read Public Citizen’s testimony, click here. To view a chart detailing the $4.1 billion in fines, penalties and other payments by natural gas companies to settle allegations of market manipulation, click here.
Hauter will testify at 2:30 p.m. today in Room 253 of the Russell Senate Office Building.