Coalition Letter on Speculation in Futures Markets for Physical Commodities

Commercial aviation helps drive more than 10M American jobs and 5 cents of every dollar of U.S. GDP
Commercial aviation drives more than $1 trillion per year in economic activity
In 2012, U.S. airlines moved more than 48,000 tons of cargo per day
In 2012, the value of a kilogram of U.S. merchandise exported by air averaged 121 times the value exported by sea
For every 100 airline jobs, some 360 are supported outside of the airline industry
Federal taxes constitute $61 – or 20% – of the price of a typical $300 domestic round-trip ticket
In 2011, U.S. airlines carried 16 percent more passengers and cargo using 10 percent less fuel than in 2000
Domestically, airlines drive 5% of economic activity but account for 2% of man-made GHG emissions
From 2000-2011, airlines reduced GHG emissions by 11% while transporting 16% more passengers and cargo
From 1975-2011, U.S. airlines and their partners reduced significant noise exposure by 99%
Commercial air travel is the safest form of intercity transportation in the United States
In the most recent decade, scheduled air service on U.S. airlines was seven times safer than in the 1970s
From 2000-2012, U.S. airlines improved the on-time arrival rate from 72.6% to 81.9%
From 2000-2012, U.S. airlines reduced the flight cancellation rate sharply from 3.30% to 1.29%
Airfares are a bargain: From 2000-2012, U.S. CPI rose 33% while average domestic fare rose just 14%
Adjusted for inflation, the average round-trip domestic airfare fell 15% from 2000
2007 domestic flight delays cost the United States approximately $31 billion
In 2012, the value of U.S. merchandise exported by air reached an all-time high of $427B
In 2012, U.S. exports of air-travel services reached an all-time high of $39.5B, driving a $5.1B trade surplus
In 2012, U.S. passenger and cargo airlines spent more than $50B on fuel, averaging 36% of operating expenses
In 2012, U.S. airlines posted the lowest annual rate of mishandled baggage ever recorded
FAA projects U.S. air travel demand to top 1 billion passengers in 2027
In 2012, US airlines flew 83.4 million passengers in scheduled international service - a record high
In 2012, the total value of merchandise exported from or imported to the United States by air exceeded $927 billion
In 2012, 7.15 teragrams of merchandise was exported from or imported to the United States by air

	Coalition Letter on Speculation in Futures Markets for Physical Commodities
	PubZone1 September 29, 2008 The Honorable Harry Reid, Majority Leader United States Senate S-211, The Capitol Washington, DC 20515 The Honorable Nancy Pelosi, Speaker U.S. House of Representatives H-232, The Capitol Washington, DC 20515 Dear Majority Leader Reid and Madam Speaker Pelosi: We understand that the serious economic consequences of the failures in the U.S. financial sector necessitate that Congress focus on providing stability to those markets prior to adjournment. However, the undersigned organizations strongly encourage you also to take important steps as soon as possible to address the impact of excessive speculation in the futures markets, which may manipulate actual “spot” prices for physical commodities. For some time, many of us have been concerned about the impact of commodity speculation on important commercial economic interests and U.S. consumers. The instability in the financial markets and throughout the financial sector only serves to fuel our concern that large investors will establish highly distorting speculative positions in the futures markets for physical commodities. We believe that index traders and other large-fund investors will view the commodity markets as an opportunity to maximize their returns and as a “safer haven” for their investment capital. We would not allow them to hoard vast quantities of the actual product (such as oil) for the purpose of driving up prices or cornering the market. Likewise, we should not allow them to do the same thing in the futures markets. These speculative purchases will come at the expense of bona fide hedgers, farmers and others who indirectly rely on futures-based contracts as price discovery and risk-management tools, and consumers who have little ability to influence the retail market prices for energy and agriculture commodities that are, in large part, determined through the futures markets. The House recently passed H.R. 6604, the “Commodity Markets Transparency and Accountability Act of 2008” by a bipartisan vote of 283 to 133. We believe that this legislation represents a good starting point for ensuring that the Commodity Futures Trading Commission (CFTC) is able, and is directed to provide a higher level of commodity market transparency, regulation and oversight than exists currently. At minimum, the CFTC should at least be able to monitor these now almost "dark" markets. A September 20, 2008, New York Times commentary by Gretchen Morgenson, “Your Money at Work, Fixing Others’ Mistakes” explains how the serious risks caused by the “billions in unregulated derivatives” caused the government to step in to protect AIG “since the world became so intertwined that the failure of one company can topple a host of others.” In the article Eric Dinallo, New York’s superintendent of insurance is quoted as saying, “The last eight years have been about permitting derivatives to explode, knowing they were unregulated. It’s about what the government chose not to regulate, measured in dollars. And that is what shook the world.” While discussing these “unregulated derivative contracts,” Ms. Morgenson recommends that America “[s]top pretending that the $62 trillion market for credit default swaps does not need regulatory oversight. Warren E. Buffett was not engaging in hyperbole when he called these things financial weapons of mass destruction.” While many of us might wish for an even greater regulatory role for the CFTC in these markets, we understand the necessity and challenge you face in crafting a package that addresses a wide range of market issues in the few days that remain in this congressional session. We believe that initial action on these issues cannot and should not be put off until next year and, therefore, should be addressed if Congress returns after the elections. The fact that this legislation passed the House with a sizeable bipartisan majority indicates generally broad support for beginning to address these serious issues in the markets for physical commodities. We urge you to support including the reforms contained in H.R. 6604 in any legislative package that Congress will consider to address the serious economic situation faced by our country. Sincerely, Air Transport Association of America California Farmers Union Cattle Producers of Louisiana Kansas Cattlemen's Association National Farmers Union Nebraska Farmers Union New England Fuel Institute Organization for Competitive Markets Petroleum Marketers Association of America Producers Livestock Association Ranchers Cattlemen Action Legal Fund South Dakota Stockgrowers Association United Stockgrowers of America Western Organization of Resource Councils PubZone2	A4A advocates measures to support aviation safety, security and well-being.