Comment Text:
10-002
COMMENT
CL-08296
From:
Sent:
To:
Cc:
Subject:
Attach:
Powell, Amanda
Monday, April 26, 2010 5:01 PM
secretary
Barnette, James
CFTC Comments
CFTC.DOC.pdf
Amanda Powell
Legal Administrative Assistant
Steptoe & Johnson
1330 Connecticut Ave, NW
Washington, DC 20036
202-429-5503
[email protected] D. Barnette
202.429.6207
jba [email protected]
1330 Connecticut Avenue, NW
Washington, DC 20036-1795
Tel 202.429.3000
Fax 202.429.3902
steptoe.com
April 26, 2010
VIA EMAIL TO SECRETAR Y@CFTC. GO V
Mr. David Stawick
Secretary
Commodity Futures Trading Commission
1155 21
st
Street, NW
Washington, DC 20581
Re:
Proposed Speculative Position Limits for
Referenced Energy Contracts and Associated Regulations
Dear Mr. Stawick:
Please find below the comments of the National Association of Convenience
Stores ("NACS") and the Society of Independent Gasoline Marketers of America
("SIGMA") regarding the Commodity Futures Trading Commission's ("CFTC's" of the
"Commission's") proposed rulemaking entitled "Proposed Speculative Position Limits
for Referenced Energy Contracts and Associated Regulations." 75
Fed. Reg.
4,144 (Jan.
26, 2010) (the "Proposed Rule").
NACS is an international trade association representing more than 2,200 retail and
1,800 supplier company members. NACS member companies do business in nearly 50
countries worldwide, with the majority of members based in the United States. The U. S.
convenience store industry, with approximately 145,000 stores across the United States,
accounts for over $625 billion in total sales and roughly $450 billion in motor fuels sales
alone every year.SIGMA represents approximately 270 independent chain retailers and marketers
of motor fuel. SIGMA members represent significant diversity within the industry.
While 92 percent are involved in gasoline retailing, 66 percent are involved in
wholesaling, 36 percent transport product, 25 percent have bulk plant operations, and
15 percent operate terminals. Member retail outlets come in many forms including travel
plazas, traditional "gas stations," convenience stores with gas pumps, cardlocks, and
unattended public fueling locations. Some members sell gasoline over the Internet, many
are involved in fleet cards, and a few are leaders in the mobile refueling movement.
Together, NACS and SIGMA members account for approximately 80 percent of
the country's retail motor fuel sales. Any effort by the CFTC or other governmental
entities to regulate the fuels marketplace, therefore, will obviously directly or indirectly
affect fuel marketers and retailers.
NACS and SIGMA Comments
It is unlikely that NACS or SIGMA members will be directly regulated by the
Proposed Rule. The indirect effects of any regulation of the marketplace in energy
commodities, particularly crude oil and gasoline, are of enormous significance to us. In
any regulation it puts forward, NACS and SIGMA urge that the Commission carefully
consider three factors: competition/transparency, the marketplace, and supply.
Competition/Transparency.
There is no more competitive, transparent market in
the United States than in the retail sale of motor fuels. The prices that NACS and
SIGMA members charge for their fuel products are available to every potential customer
passing by their places of business, 24 hours a day, seven days a week. Studies haveshown that Americans will drive out of their way to save even a penny or two on a gallon
of gasoline, keeping competition among retailers brisk not only on adjacent street
corners, but in larger geographical areas as well.
Competition through transparency is clearly not in play when the markets see
sudden, irrational, and inexplicable price spikes, as we have seen from time to time over
the last decade. Crude oil prices at $140/barrel do not make any sense with stable
supplies and the absence of international threats to those supplies. But NACS and
SIGMA members, and ultimately their customers, must continue to operate in that
atmosphere.
NACS and SIGMA request that, in any final rule governing position limits or
ancillary aspects of its work in this area, the Commission ensures that the markets in
crude oil and gasoline remain as transparent as possible. In particular, we advocate that
all speculative interests in the crude oil and gasoline markets be identified and made
transparent. This transparency will allow market participants to gauge the forces driving
the market while not impairing or unduly limiting the liquidity that must exist in the
markets if they are to fulfill their historic role of permitting commercial entities to hedge
the risk of holding, or not holding, physical inventory. A more transparent market will
help such commercial entities make competitive decisions that, ultimately, will benefit
the American public.
Motor Fuels Marketplace.
Congress has fundamentally changed the motor fuels
marketplace with the adoption of the so-called renewable fuels standards in 2005's
Energy Policy Act and 2007's Energy Independence and Security Act. Although theimplementation of those standards is not the CFTC's responsibility, the Commission
should ensure that its work in the energy markets - even just regulation of a limited
number of companies on position limits - will have an effect on a marketplace that itself
is undergoing tremendous change, as more and more gasoline is blended with so-called
"renewable fuels" for public consumption. NACS and SIGMA therefore request that the
Commission be mindful of the downstream marketplace in its decisionmaking. We
would be happy to provide the Commission or its staff with more information in this
important area.
SunNy. The availability of an abundant supply of motor fuels is literally the
lifeblood of our industry, and in many respects the American economy. In making its
decisions concerning any appropriate level of regulation for the futures markets, the
Commission needs to ensure that it does nothing to diminish the free flow of actual,
physical products into the market. In other words, we advocate for a system free of
manipulation and anti-competitive speculation, but only in a manner that does not choke
off or eliminate the transactions necessary to provide us with product supply.
NACS and SIGMA appreciate the opportunity to provide the Commission with
their views regarding the Proposed Rule. Please do not hesitate to contact me if we may
be of any service to the Commission or its staff.
Sincerely,
James D. Barnette
