Today is National Beer Can Appreciation Day and in Colorado, we know a thing or two about beer. Our state is the largest beer-producing state, employing nearly 3,000 people in my home district alone.
America’s economy was built on a bedrock of free-market principles, that’s why our nation’s 7,000 brewers have contributed over $300 billion year after year to our economy. Brewers across the country rely on a fair and free market for aluminum purchases. But within the past year, concerns have been voiced about whether this multi-billion dollar industry has been operating in a fair and free market when it comes to an important part of their supply chain: aluminum.
These market irregularities have cost America’s brewing industry hundreds of millions of dollars and raised the price of beer, soda, and other household goods my constituents use every day. That’s why I’ve sponsored the Aluminum Pricing Examination (APEX) Act, to give the Commodities Futures Trading Commission (CFTC) proper oversight authority of the aluminum market.
With this bill, our nation’s brewers can continue to produce some of America’s most popular beverages. I’ve been a lifetime defender of free markets and my bill ensures the thousands of businesses that rely on a steady stream of aluminum have access to a fairly and transparently priced product.
What’s causing prices on aluminum to rise?
These anomalies stem from pricing spikes in the Midwest Premium. Brewers and other businesses that purchase aluminum must pay a benchmark fee called the Midwest Premium, which is intended to serve as a “shipping and handling” cost for transporting aluminum.
The process to establish a benchmark for the Midwest Premium is unclear. I’ve looked at the impact on the many American industries that rely on aluminum and it concerns me that besides the Midwest Premium provider, no one has the authority to oversee these benchmarks.
This unclear process and lack of oversight are both troubling, especially as the Midwest Premium has more than doubled — yes you read that right, doubled — since the beginning of 2018.
Rate setters will tell you that President Trump’s tariffs on aluminum and steel are the culprit. However, President Trump’s tariff policy has sought to target bad actors from taking advantage of American aluminum producers.
I’ve also heard concerns that players in aluminum markets may have used this policy to artificially alter the marketplace. As such, the aluminum market has experienced unprecedented cost fluctuations that are disconnected from marketing fundamentals since the beginning of 2018.
Even U.S. Commerce Secretary Wilbur Ross admits “the fact of aluminum’s price going up does not seem to justify a huge increase in the Midwest Premium.”
When asked about aluminum benchmarking, the former CFTC Chairman Christopher Giancarlo told Congress, “I think there are concerns about the way the index, used by some of the index providers is constructed. That’s an area that’s actually outside of our jurisdiction. We do not regulate the formulation of benchmarks; we only oversee where there may be manipulation that would affect one of our derivative markets.”
Without federal oversight, the potential exists for our free market to be distorted. We need to fully equip the CFTC, along with the U.S. Department of Justice, with proper oversight authority to ensure this market is free from influence.
The APEX Act’s positive impacts would be far from a collapse of the free market as some experts suggest. As the primary sponsor of this legislation, I can assure Americans that this bill does not allow any federal government official or agency to set the price of aluminum or artificially impact the aluminum market.
My bill ensures our brewers are operating on a level playing field and get back to what they do best: brewing the best beer in the world.
Congressman Ken Buck is a Republican from Windsor, representing Colorado’s 4th Congressional District. He was first elected to Congress on November 4, 2014, and is currently serving his third term in the United States House of Representatives.