The Source - Fall 2008 - (Page 22)

Ordering from us is as easy as child’s play. Every city uses natural cook , and heat to operate,  MARKET TRANSPARENCY, from page 21 that detailed the impact Amaranth’s excessive speculative activity had on price and market volatility. APGA testified at a hearing on that report. APGA also testified before the House Agriculture Committee, the House Energy and Commerce Committee, and the CFTC about the need for additional transparency. Soon after the Senate Permanent Subcommittee on Investigations report was released, Congressmen John Barrow (D-GA) and Sam Graves (R-MO) introduced the Market TRUST Act. APGA worked closely with the Congressmen’s office in the drafting of this legislation and strongly supported it. The Market TRUST Act would have increased transparency by requiring large traders of natural gas to report their OTC positions to the CFTC. Senators Carl Levin (D-MI) and Dianne Feinstein (D-CA) also introduced market transparency bills in the Senate. Also in 2007, the CFTC announced that it would establish an Energy Markets Advisory Committee. APGA had pushed for the creation of this type of group to facilitate greater public involvement to assist the Commission as its policies necessarily evolve to meet the challenges posed by new conditions in the energy markets. The group would also offer technical advice on issues relating to reporting and surveillance of the markets, as well as spotting new trends and issues that that the CFTC should address. An APGA representative was appointed, and the group held its first meeting June 10. APGA’s efforts to increase natural gas market transparency culminated in the passage of transparency language as part of the Farm Bill in May 2008. This language is now law. Bringing it all together What does the passage of this legislation mean to natural gas consumers? It increases transparency on exempt commercial markets, such as the Intercontinental Exchange, in the trading of significant price discovery contracts, making such contracts subject to reporting and recordkeeping requirements. It also requires exempt Help keep your community safe by using With over 60 years experience, you can expect quality odorants, superior technical assistance with help, and same or next day shipping. We also provide if needed and a full-service site to help you order the right product. All our products are made right here in the Everyone , we make . good scents. Distributed by might develop in the future and a limited amount of storage capacity. Because natural gas cannot be readily transported around the globe to offset local shortages, the market for natural gas is particularly susceptible to localized supply and demand imbalances. Amaranth’s strategy was reportedly based upon a presumption that hurricanes during the summer of 2006 would make natural gas more expensive in 2007, similar to the impact that hurricane Katrina had had on prices the previous year. As reported in the press, Amaranth held open positions to buy or sell tens of billions of dollars of natural gas. As hurricane season proceeded with very little activity, the price of natural gas declined, and Amaranth lost approximately $6 billion, most of it during a single week in September 2006. The unwinding of these excessively large positions and that of another previously failed $430 million hedge fund—MotherRock— further contributed to the extreme volatility in the price of natural gas. The impact of this volatility was felt by many of the natural gas distributors that had locked in prices prior to and during the period of Amaranth’s collapse. Because their hedging procedures require that they hedge part of their winter natural gas in the spring and summer, many natural gas local distribution companies locked in to prices at that time. Accordingly, even though natural gas prices were high, it would have been irresponsible (and contrary to their hedging policies) to not hedge a portion of their winter gas in the hope that prices would eventually drop. Thus, the elevated prices that were a result of the excess speculation in the market by Amaranth and others had a significant impact on the price these distribution companies, and ultimately their customers, paid for natural gas. APGA testiﬁes, Congress takes action As Amaranth’s market abuses came to the light, congressional focus on the need for additional market transparency increased. In June 2007 the Senate Permanent Subcommittee on Investigations released a report Call 877.578.4646 today or email us at info@gasodorant.com www.gasodorant.com 22 THE SOURCE | THE VOICE AND CHOICE OF PUBLIC GAS 384871_Chevron.indd 1 6/12/08 11:27:40 AM http://www.cpchem.com

Table of Contents Feed for the Digital Edition of The Source - Fall 2008

The Source - Fall 2008 Contents First Person APGA Awards APGA Events Overview Up Next in THE SOURCE Grassroots Connections Climate Change Legislation Market Transparency: An Insider's View Legislative Outlook The Pipeline Marketing Matters Advertisers' Index At Last

The Source - Fall 2008

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