Democrats in the U.S. Senate are looking beyond a summer gasoline tax holiday to focus on broader oil market fundamentals. Yesterday, Senate Majority leader Harry Reid [D-Nev.] unveiled the Consumer-First Energy Act, which calls for a revocation of tax breaks to big oil companies, a windfall profit tax and a cap on additions to the government's Strategic Petroleum Reserve.

Included in the bill is a diktat to the Commodity Futures Trading Commission [CFTC] to substantially raise margin requirements for oil futures. That measure, say the bill's sponsors, would discourage excessive speculation which is blamed for fueling oil's meteoric price trajectory.


While corporate flacks at ExxonMobil and BP went into overdrive to deride the bill's tax provisions, the New York Mercantile Exchange took issue with the margin mandate.

Setting onerous margins would be counterproductive, says the exchange, for a number of reasons, not the least of which would be driving trading volume away from the NYMEX to "dark unregulated venues" and opaque offshore markets. Besides, says the bourse, speculators (read: "large non-commercial participants") haven't been that much of a factor in the current crude oil price run-up.