End Financial Engineering for Natural Gas

Natural gas represents our energy future, yet Wall Street could stand in the way of us getting there.

Natural gas is cheap and domestically produced. New technologies can make old wells produce anew and new wells produce more. And while alternative energy sources like wind, biofuels and solar are years away from being competitive, natural gas is ready to take the energy lead right now.

However, if natural gas is subject to the same financial manipulation that has plagued crude oil for the past three years, we'll be stuck with another energy source with a price that cannot be relied upon. Natural gas will end up being just another source of trading profits for the big banks and hedge funds.

That's why we need to ring fence natural gas from these forces now.

We need to stop "dark pool" trading in the natural. That means no more bilaterally cleared trading and no more customized markets that exclude many investors. Even better would be ending all financial trading of natural gas using swaps, whether or not they're cleared on regulated exchanges.

Natural gas has many financial advantages over crude that make this proposal feasible.

Crude oil has hundreds of different grades that rely upon the pricing of one or two benchmarks such as West Texas Intermediate at the NYMEX or Brent Crude at the ICE. Natural gas does not.

In addition, the storage of natural gas is expensive and difficult, making many of the trading strategies that have manipulated crude prices impossible.