"Unregulated energy markets are an international Wild West of speculative gambling," said Judy Dugan, research director of FTCR and its OilWatchdog.org project. "With energy prices affecting the economy as a whole, controlling greed-driven speculation is a national security issue."
While energy traders must report on their activity in the New York Mercantile Exchange, the largest U.S. energy futures market, other unregulated "dark markets" such as the London-based Inter-Continental Exchange operate without oversight. The reason is a 2000 loophole inserted in U.S. law at the behest of Enron, exempting energy futures trading on new electronic markets from even U.S. trade-reporting requirements. Enron, then a powerful political force, argued that deregulation would make energy markets more "efficient" at setting a logical price and protecting producers and consumers from wild swings. Deregulation actually did the opposite, as Californians learned in their electricity crisis of 2000-2001. Now it is the entire world economy paying the price, said FTCR.
"Without regulation, energy trading is a gambling hall, not a sober tool for setting realistic prices and protecting a commodity from price swings," said Dugan.
