Ed Wallace's Rebuttal

Concerning a recent column, Ed Wallace offers his rebuttal to criticism by the CEO of IntercontinentalExchange

Columnist Ed Wallace offers his rebuttal to Jeffrey C. Sprecher, the chairman and chief executive of global commodities marketplace IntercontinentalExchange (ICE), who wrote a letter challenging several of the assertions made by Wallace in a column published June 27 (BusinessWeek.com, 6/27/08).

This is written in response to the letter from Jeffrey C. Sprecher, chairman and CEO of IntercontinentalExchange:

The words a "dark and unregulated" exchange are exactly as I stated in the article: Not my words. Those are the descriptions of IntercontinentalExchange as stated frequently during the four days of testimony in front of the House Committee on Energy & Commerce's subcommittee on oversight & investigation, held from Dec. 10-14, 2007. It is the exact same terminology for ICE that was found in the U.S. Senate permanent subcommittee on investigations' report, The Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put the Cop Back on the Beat. That report was released on June 27, 2006.

I specifically added the OTC to the name ICE Futures Europe, because the system in question during the House hearings and in the Senate report refers to ICE's "over the counter" computer terminals in the U.S. Mr. Sprecher is well aware of what I was referring to and, as in his letter to the Fort Worth Star-Telegram, is assuming no one other than me bothered to read the Senate report or the four days of congressional testimony.

It is interesting to note that when I wrote of ICE Futures Europe in the Fort Worth Star-Telegram, ICE chastised my reporting because of the missing "OTC" position. Additionally, he often uses the "OTC" term himself in letters. See below.

Mr. Sprecher often writes one thing on one day and tells a journalist or elected representative something else on the next. The case in point this time is that ICE only has "an approximate 15% share of West Texas Intermediate." However, in a letter to Senator Dianne Feinstein (D-Calif.), dated May 22, 2008, and furnished to me by ICE, he writes, in part, "ICE's OTC markets, which were the subject of the Farm Bill Provisions, have a 0% market share for U.S. crude oil, gasoline, heating oil, and diesel fuel." Which is it? A 0% market share for WTI or 15%? I will be glad to furnish that letter ICE sent me a few weeks back.

Of course, Mr. Sprecher is completely missing the point of the article when he suggests that there are other sides to the oil equation story. I'm putting out the side of the oil story that is never read. In the same way that this spring when the media were reporting that we would have serious gasoline shortages this summer, I wrote on BusinessWeek.com that we have a 16-year high for gasoline reserves on hand (BusinessWeek.com, 4/1/08).

There is no real shortage of oil and my references for that information were not only furnished with the story, but the links were embedded into it. My line that no one has been turned away from oil is accurate. Obviously it would be international news if there were more oil contracts than oil, as the reporting would make much of the fact buyers were being turned away.

More important, as someone who reads the Energy Information Administration's (EIA) short- and long-term oil reports on a regular basis, their conclusions are all over the map. If one doubts that, read my column where the EIA becomes the source of information on oil's improved picture (BusinessWeek.com, 4/23/08).