WASHINGTON, Nov. 20, 2013 /PRNewswire/ -- With the 2010 passage of the Dodd-Frank Act, Congress set a course to damage one of the key tools used by energy suppliers and users to tamp down energy price volatility, according to a new study released today by the Abraham Energy Report. The study urges Congress to consider entirely exempting physical commodity businesses from financial regulation that was meant to address the players that caused the global financial crisis. The study finds that unless Congress takes remedial action, the effects of energy price volatility will be felt throughout the entire economy.
The study, entitled "Dodd-Frank and Energy Price Stability: Time to Rein In Unintended Consequences," was written by Spencer Abraham and Mark P. Mills. Abraham, former U.S. Secretary of Energy, is the Chairman & CEO of The Abraham Group, an energy consulting firm. Mills is CEO of Digital Power Capital and a Senior Fellow at the Manhattan Institute.
"Congress has unintentionally set a course to damage one of the core tools used by energy suppliers and users to tamp down energy price volatility," the authors explained. "When energy price volatility rears up again - as it inevitably will since no one has yet found a way to eliminate volatility - the effects this time will be more widely felt in the economy because energy companies will have been driven out of their traditional role as providers of risk management products to their energy-using customers."
Congressional passage of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act was intended to address the root causes of the 2008 financial collapse. Swept into Dodd-Frank are the financial tools used by major energy producers and consumers to reduce business and consumer risks from the inherent volatility in the prices of primary energy commodities. The study notes that less than 0.3% of the total swaps market involves energy transactions.
Via: Digital Journal
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