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Published July 2007
This report was conducted by the United States Senate's Permanent Subcommittee on Investigations. Chairman Senator Carl Levin and Ranking Minority Member Senator Norm Coleman led the subcommittee that investigated speculation in the natural gas market; they found that,
"1. A single hedge fund, Amaranth Advisors LLC, dominated the U.S. natural gas market in 2006.
2. In August 2006, Amaranth traded natural gas contracts on ICE rather than on NYMEX so that it could trade without any restrictions on the size of its positions.
3. Amaranth's actions in causing significant price movements in the natural gas market demonstrate that excessive speculation distorts prices, increases volatility, and increases costs and risks for natural gas consumers, such as utilities, who ultimately pass on inflated costs to their customers.
4. The two major U.S. exchanges that trade natural gas - NYMEX and ICE - affect each other's prices.
5. Current restraints on speculative trading to prevent manipulation and price distortions are inadequate.
6. The CFTC is unable to meet its statutory mandate to prevent market manipulation and excessive speculation from causing sudden unreasonable, or unwarranted energy prices."
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