Where is the CFTC (now FINRA) in the maze and haze of what has to be speculation in the energy markets that is causing the equilibrium of market forces such as supply and demand to be so out of whack?
Was it not the CFTC that in 2003, charged Enron with manipulation of natural gas prices?
Remember the sordid details of the market manipulations from back then? Enron’s strategy was relatively simple: they Enron traders would purchase an unusual number of contracts for spot gas, thereby driving up prices by simultaneously increasing demand, artificially, in the marketplace and making other traders think that there was some fundamental factor that favored higher prices. Brilliant! And criminal!
Was it not the CFTC that in 2003, charged Enron with manipulation of natural gas prices?
Remember the sordid details of the market manipulations from back then? Enron’s strategy was relatively simple: they Enron traders would purchase an unusual number of contracts for spot gas, thereby driving up prices by simultaneously increasing demand, artificially, in the marketplace and making other traders think that there was some fundamental factor that favored higher prices. Brilliant! And criminal!
Enron settled the charges brought by the CFTC by agreeing to pay a $35 million fine in 2004. The rest is history. ASnd unfortunately, so is the existence of the company.
There have been several well-noted incidents of energy companies paying huge sums in fines to the CFTC to settle charges that they manipulated natural gas prices in years past by providing false information about supply levels to regulators at the FERC or to the Platts data and pricing service. Platt’s is the leading source of information about energy market conditions.
The bogus Platts and FERC reports served to send false signals to other market participants that supplies were significantly tighter than expected, and prices rose (sharply, but briefly) as a result.
The bogus Platts and FERC reports served to send false signals to other market participants that supplies were significantly tighter than expected, and prices rose (sharply, but briefly) as a result.
Several energy companies, not just Enron, have admitted to “gaming” the energy and electrical power marketing system, most notably in California, exacerbating price increases and perceived shortages. The illegal strategies include deceptive reporting of energy supplies on hand (to create the impression of shortages to drive up prices), disguising the source of electricity (to take advantage of variable pricing for in-state and out-of-state power), and in some cases actually shutting down power plants during times of tight supplies to drive up prices.
Again, where is the CFTC in all of this?
Again, where is the CFTC in all of this?
c. 2008 Phil Green
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