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Regulators Look into Gas Price Spikes

by Jeff Johnson
January 26, 2004 | A version of this story appeared in Volume 82, Issue 4

The Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission are collaborating to review the cause of recent natural gas price spikes.

The examination has so far found no instances of market manipulation that could trigger a full investigation, federal officials say.

Last month, several senators called for the investigations, and Sen. Orrin G. Hatch (R-Utah) promised to hold Judiciary Committee hearings. Hatch has backed off, but a hearing is expected before the Senate Energy Committee.

Natural gas prices have soared recently, especially hurting chemical companies that use it for fuel and feedstock.

Cold northeastern weather is adding to fears that prices will continue to climb. And many in Congress, led by Sen. Pete V. Domenici (R-N.M.), say high gas prices are further justification for Senate passage of the energy bill.

But chemical company officials say the bill holds no provisions for short-term relief from price spikes, and they warn that the bill's stalemate is blocking Congress from considering more immediate solutions.

"You have record gas inventories, record numbers of drill rigs, and you still have gas spiking at 7 or 8 bucks a million BTU," says Don Olsen, a spokesman with Huntsman LLC.

Olsen wants an investigation into gas futures trading on the New York Mercantile Exchange. CFTC has begun a review of NYMEX trading data and has beefed up market surveillance, but CFTC officials have found no justification for a full investigation.


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