Oil Speculators Must Be Stopped

A more likely influence on modern thinking is due to Hubbert’s Peak Oil Theory introduced in 1954. It has figured prominently in the ecological/environmental movement. In fact, the entire global warming movement indirectly sits on top of the Hubbert Peak Theory. - Carbon Currency to Replace All Paper Currencies, Limiting Manufacturing, Food Production and People Movement

Here's the problem: The investment banks (Morgan Stanley, JP Morgan, Goldman Sachs, etc.) used to lend money to Merchants Producers End Users and Speculators (companies/individuals that use the resources to make products using commodities), which allowed supply and demand to work. But in 2002 Congress passed laws that allowed the investment banks to trade commodities for themselves, so they bought warehouse storage tanks, leased ships themselves, etc. The Federal Reserve, which is owned by the banks, gave them unlimited funds with which they now control the markets. The people are getting screwed by this arrangement and it must end. THE GLASS Steagall ACT must be brought back along with contract limits on positions, and the Volker RULE must be enforced or THE BANKSTERS will rob us all. The banksters need JAIL TIME NOW. - William H., Oil Speculation Imposes “the Most Insidious Tax” on Americans

Oil Speculators Must Be Stopped and the CFTC “Needs to Obey the Law”: Sen. Bernie Sanders

April 16, 2012

The Daily Ticket - The recent rise in gasoline prices has prompted Congressional hearings and a call to federal regulators to curb what many see as the cause for the spike: oil speculators.

A House subcommittee held a hearing on "The American Energy Initiative" Wednesday morning that focused solely on rising pump prices. Seventy members of Congress signed a letter this week to regulators at the Commodity Futures Trading Commission (CFTC), urging immediate action on oil speculation by enacting "strong position limits" and to "utilize all authorities available to…make sure that the price of oil and gasoline reflects the fundamentals of supply and demand."

The CFTC was given authority in the Dodd-Frank Wall Street Reform and Consumer Protection Act to impose position caps on oil traders beginning in January 2011. These limits have not yet been implemented by the CFTC. In an interview Wednesday with The Daily Ticker, Sen. Bernie Sanders (I-VT) says the CFTC doesn't "have the will" to enact these limits and "needs to obey the law."

"What we need to do is…limit the amount of oil any one company can control on the oil futures market," says Sanders, who has long advocated limits on speculation. "The function of these speculators is not to use oil but to make profits from speculation, drive prices up and sell."

The average price of a gallon of gasoline in the U.S. has increased nearly 30 cents in one month according to the AAA's Daily Fuel Gauge Report. U.S. oil prices have jumped more than six percent since Feb. 1 even though oil demand in the U.S. is at its lowest level since April 2007. The International Energy Agency (IEA) reported that the world's oil supply rose by 1.3 million barrels a day in the last three months of 2011 while world demand increased just 0.7 million barrels per day during that same time period.

This is not the first time oil speculators have been blamed for higher energy prices. In 2008 U.S. oil prices skyrocketed to $145 per barrel and gasoline prices averaged well above $4 per gallon. There were calls to increase domestic offshore drilling and legislation was proposed that would have required buyers of oil to physically own and store the oil barrels. Then the 2008 financial crisis hit causing oil and gasoline prices to plummet.

Blaming the speculators may seem like scapegoating to some (namely, oil traders) but speculators control more than 80 percent of the energy futures market, up from 30 percent a decade ago, and there is mounting evidence that speculation contributes to higher prices:

• At a Senate hearing last June, Rex Tillerson, the CEO of ExxonMobil, said speculation was driving up the price of a barrel of oil by as much as 40 percent.
• A study conducted by the nonpartisan consumer advocacy group Consumer Federation of America found that speculation caused the average American household to spend an additional $600 on gasoline expenditures in 2011. Moreover, the report concluded that excessive speculation (which the organization estimated added about $30 per barrel to the cost of oil in 2011) drained the U.S. economy of more than $200 billion in consumer spending in 2011.
• The St. Louis Federal Reserve has also recommended that the CFTC do more to prevent oil speculators from driving up the price of oil. Fed officials studied the effect of oil traders on the price oil over five years and determined that "speculation contributed to around 15 percent to oil prices increases."
• CFTC Chair Gary Gensler declared last year that "huge inflows of speculative money create a self-fulfilling prophecy that drives up commodity prices."

There are many components reflected in the current price of oil, including old-fashioned supply and demand and geopolitical factors (such as a possible attack on Iran). Rising gasoline prices are a huge pocketbook issue for many Americans, a reason alone for politicians to focus on the role of the speculators.

President Obama Targets Oil Speculators: Another Election Ploy?

April 16, 2012

The Daily Ticker - President Obama today raised the ante on his efforts to limit the rise in oil prices. The president, joined by Treasury Secretary Tim Geithner and Attorney General Eric Holder, called on Congress to adopt tougher rules on speculators in the oil market.

"We can't afford a situation where some speculators can reap millions while millions of American families get the short end of the stick," President Obama said.

The president's $52 million proposal would stiffen penalties for firms found to manipulate markets and raise the amount of money traders would have to put up to back their positions. It would also beef up the enforcement staff of the Commodity Futures Trading Commission and increase spending on technology to oversee and monitor energy markets.

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