Opening speech by Commissioner Kristin N. Johnson to the Advisory Committee on Energy and Environment Markets

Good morning I would like to thank Commissioner Mersinger for the kind invitation to attend this meeting of the EEMAC – the inaugural meeting of this advisory committee chaired by you. I would also like to thank the members of this committee. These are volunteer duties and I fully understand that you have very demanding day jobs. Thank you for your service and sacrifice. We really appreciate your contribution. Thank you to Oklahoma State University (OSU) for hosting this important gathering.

I am sorry to miss being with you today, but I am delighted that one of my fellow Commissioners had the great insight to host a meeting in a place where I have many friends and neighbors. You can take Interstate 35 from my family’s home in Dallas, and if you drive a few hours north, you’ll arrive in Stillwater, Oklahoma. I’ve been fortunate to attend many football games at OSU.

Although I have attended many college football games, I have never played on a football team. However, as Commissioner I am learning how important and privileged it is to contribute to a successful team. We are five individuals who can vigorously discuss questions and problems – the “how” – that is, the path we will take to achieve common goals. However, we are undivided, united in our understanding of the “why” or reason we serve. Our outstanding commodities and derivatives markets are valued by many around the world. Our job is to maintain and enhance the integrity of our financial markets. We can vigorously debate the “how” but we must never lose sight of the “why” in order to achieve that goal.

For many sectors of our economy, value is based on the production of real goods and services that flow through the flow of trade to every corner of our nation and to the four corners of the world. To this end, investments in maintaining and improving energy infrastructure are crucial. Investing in energy infrastructure is vital to our economy.

President Biden recently signed the bipartisan infrastructure bill into law.[1] Among other investments, the law earmarks $65 billion to upgrade electrical transmission grid infrastructure to improve system reliability and resilience and facilitate the roll-out of renewable and clean energy.[2] Funds will be made available to strengthen the transmission grid to reduce risks from wildfires, hurricanes and other disruptive events, and to build thousands of miles of new transmission lines.[3] The bill represents the government’s most significant commitment to infrastructure since the US highway system was built after World War II. That includes this 1,500-mile highway that ascends from Laredo, TX and runs through my hometown, through your location, and to Duluth, Minnesota. Last month I spent a week traveling through North, Central and South Texas visiting energy producers, traders and family growers that have been in the business for generations. These issues are part or legacy – one that we leave to future generations.

Investing to create durable assets meant to last for decades is difficult when you cannot predict the costs of building, maintaining and replacing infrastructure assets. The complexity of planning capital expenditures related to energy production cannot be overstated. Price volatility, particularly inflationary volatility, can pose challenges for commodity producers.[4] When derivative markets work well, they provide an essential mechanism to mitigate or transfer risk and to control pricing. I would like to point out that this is part of the reason “why” we serve.

During today’s meeting, you also intend to discuss the role of the metals market as components in transitional energy sources, as well as the potential impact on CFTC-regulated financial markets. It should be noted that our markets are global. Geopolitical events in Europe, notably the invasion of Ukraine, have led to notable disruptions in energy and agricultural markets.

Have we successfully identified transitional energy sources? Do we have access to these resources or the components that make it possible to power our farms, schools, churches, universities and businesses?

For many of the problems you will discuss, the solution can be elusive and even difficult to identify or define. If the solutions were easy to find, we might have identified and implemented them already. Still, this is the right time to ask difficult questions, face difficult truths, and prepare for the future we seek to build. Again, we may not immediately agree on the path or the ‘how’, but we can agree today on the reasons for the ‘why’.

Thank you again for letting me join you. I look forward to the thoughtful dialogue and discussion of today’s meeting.

[2] The White House, FACT SHEET: The Bipartisan Infrastructure Deal Boosts Clean Energy Jobs, Strengthens Resilience, and Advances Environmental Justice, (November 8, 2021), available at https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/08/fact-sheet-the-bipartisan-infrastructure-deal-boosts-clean-energy-jobs-strengthens-resilience-and- progress-environmental-justice/.

[3] See ID.

[4] SSee e.g. B. Patrick Thomas, Farmers Feel the Squeeze of Inflation, THE WALL STREET JOURNAL, February 15, 2022, available at https://www.wsj.com/articles/farmers-feel-the-squeeze-of-inflation-11644921180.