Congress needs to be suspended for non-emergency periods

They are shooting themselves in the feet yet again:

While some kind of crackdown on the U.S. oil futures market is inevitable after so much political agitation, Congress has begun to believe its own demagoguery. The Senate may vote on a bill this week that will drive commodities trading overseas and decrease oversight and market transparency. Call it a Sarbanes-Oxley for energy.

Because commodity futures trading is a complex financial instrument, "speculation" makes an expedient scapegoat for edgy lawmakers and even aggrieved industries -- such as the airlines. But it performs a vital price-discovery function. Major energy producers and consumers, such as refiners, buy and sell these contracts to lock in oil at a future price, as a shock absorber against volatility. Essentially, they're bets that reveal market expectations about the supply and demand of oil, as well as the rate of inflation.

Even the title of the Senate's bill -- the "Stop Excessive Energy Speculation Act" -- is idiotic. True, the volume of trading has increased by about sixfold since 2000, but it can't be "excessive." The inviolable law of futures markets is that someone has to take the other side of any option. That is, the value of contracts agreed to by sellers anticipating that prices will fall must equal the value of contracts agreed to by buyers anticipating prices will rise. The overall size of the market is irrelevant.

Dick Durbin, Barack Obama, Hillary Clinton and Chuck Schumer -- the home-state Senators of the Chicago Mercantile Exchange and Nymex, respectively -- need to decide if they're going to vote to wound the competitiveness of their shareholder-owned American brokerages. Not to mention the fact that increased foreign trading wouldn't be subject to CFTC scrutiny. Congressional rabble-rousers have exaggerated the problem of "dark" markets, but they certainly seem intent on creating more of them.

Despite the assertions of Mr. Dorgan and the likes of Virgin Islands fund manager Michael Masters, the climb in energy prices has been impelled by the tight margins between world-wide supply and demand, and exacerbated by the Federal Reserve's weak dollar. Congress could avoid blowing up the U.S. futures market by conceding that reality.

Despite the assertions of Mr. Dorgan and the likes of Virgin Islands fund manager Michael Masters, the climb in energy prices has been impelled by the tight margins between world-wide supply and demand, and exacerbated by the Federal Reserve's weak dollar. Congress could avoid blowing up the U.S. futures market by conceding that reality.