While European and U.S. regulators develop new rules to govern derivative transactions, energy companies and investors are reportedly expressing concerns about the potential for measures that are intended to rein in the risks taken by financial institutions to affect their business. The energy industry apparently relies on derivatives and hedging as a buffer against fluctuating commodity prices and to guard against risk over the life of a loan on major projects. Industrial and commercial energy users also use hedging as protection against changes in fuel and power prices.
The New York Times reports that the Commodity Futures Trading Commission has been releasing its new regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act piecemeal, which has made gauging their impact difficult. According to risk managers, if credit is more difficult to obtain and less market liquidity ensues, the ability of companies to invest in facilities, storage and infrastructure will be affected. Public comment is requested on commission proposals, but industry watchers apparently believe they will remain, for the most part, intact. See The New York Times, October 13, 2010.