A year ago, Senators Ron Wyden (D-Oregon) and Charles Grassley (R-Iowa) released a discussion draft of a bill that would eliminate the favorable tax treatment of direct and certain derivative investments in oil, natural gas, or any primary product of oil or natural gas (such as diesel and gasoline), and solicited public comments on their draft proposal. On August 6, 2009, Senator Wyden introduced the Stop Tax-breaks for Oil Profiteering Act (the “STOP Act”) in the Senate, proposed legislation based on the discussion draft released in 2008. The STOP Act is intended to temporarily curb excessive speculative trading in the oil and gas futures markets and thereby temper the rise in the price of oil. If enacted into law in its current form, the legislation would apply to transactions entered into during a period of a little more than 4 years.

As of the date of this alert, the STOP Act has been referred to the Senate Finance Committee. It is impossible to predict its progress in the legislative process and whether and in what form it may be enacted into law.