In one corner, advocating for the all-knowing wisdom of the markets to give the people what they need -- are the Wall Street boosters ...
The Energy Report - Trend Change
by Phil Flynn, International Business Times, ibtimes.com -- Mar 6, 2012
In a letter to the Commodity Futures Trading Commission as reported by Dow Jones on Monday, nearly 70 House and Senate lawmakers pressed the CFTC to enforce caps or position limits on speculative trading adopted in October under the Dodd-Frank financial reform. Yet it is possible and perhaps even likely that this legislation could actually harm the economy and have the exact opposite effect on oil prices than these senators expect. Dodd-Frank, when applied to the commodity markets, is a disaster and will set off a wave of unintended consequences that could harm each and every American family.
Now with the threat of war and major disruption across the globe we are seeing the reason why speculators are vital to the health of the global economy. They are assuming the risk that others will not. In the world where the threat of the shutdown of the Straits of Hormuz and war in the Middle East and oil embargos and the like, there is a hoarding mentality when it comes to global supply. Countries are fearful that they may not have adequate energy supply and if speculators decide not to assume the risk of insuring supply, then it is very possible we are seeing a situation where supply actually could dry up.
In fact instead of demonizing oil speculators they should be on their knees thanking oil speculators for assuming the risk that Wall Street and the rest of the world fear to take. In other words, they should be thanking oil speculators for saving the global economy. The lawmakers said in their letter that it was irresponsible to delay enforcement in light of rising energy costs. I think it is irresponsible to push through legislation that if you do not understand.
Thank your lucky stars for those daring speculative folks, they are taking the Risk so we won't have to. (Nevermind they are leveraging our future earnings to do so. They DO work for profit afterall. No Risk ... No Reward$.)
In the other corner, advocating for increased market regulations and oversight to give the people a fighting chance to get a fair market price -- are the Main Street protectors ...
Stop Wall Street Speculators From Driving Up Gas Prices, Lawmakers Say
sanders.senate.gov -- March 5, 2012
The lawmakers - 23 senators and 47 members of the House - said in a letter to the Commodity Futures Trading Commission [CFTC] that the regulators must stop Wall Street futures traders from dominating the oil market. The commission has flouted a provision in the 2010 Wall Street reform law that required regulators to put tough new trading limits in place by Jan. 17, 2011. "We are disappointed that, more than a year later, the commission has not fulfilled this important regulatory duty," the letter said.
"It is one of your primary duties --indeed, perhaps your most important -- to ensure that the prices Americans pay for gasoline and heating oil are fair, and that the markets ... operate free from fraud, abuse, and manipulation," the lawmakers added.
They stressed that gasoline pump prices are up despite high supplies and low demand. According to the Energy Information Administration, the supply of oil and gasoline is greater today than it was three years ago, when the national average price for a gallon of gasoline was just $1.90. Today, the national average is more than $3.70 a gallon at a time when the demand for oil in the U.S. is at its lowest level since April of 1997.
There is a growing consensus that speculators are to blame. Exxon Mobil, the Saudi Arabian government, the American Trucking Association, Delta Airlines, the Petroleum Marketers Association of America and the Federal Reserve Bank of St. Louis all say excessive oil speculation significantly increases oil and gasoline prices. Citing a recent report from the investment bank Goldman Sachs, a Feb. 27, 2012, article in Forbes said excessive oil speculation adds $.56 to the price of a gallon of gas.
"We urge you to take immediate action to impose strong and meaningful position limits, and to utilize all authorities available to you to make sure that the price of oil and gasoline reflects the fundamentals of supply and demand."
And hovering over it all like an approaching storm, are those tough new Gaming Commission rules -- in the form of the Dodd-Frank financial reform bill ...
Those new rules that could radically change how this Futures-betting game gets played. Those new Main Street regulations which threaten to make all the Risk-taker$ 'over-under odds' -- all go south ...
Uh oh. So much for all that "Price Stability" for a gallon of gas.
Gas Prices Are “Outrageously High”: Sen. Bernie Sanders Demands Crackdown on Oil Speculation
by Aaron Task, Daily Ticker, finance.yahoo.com -- Jun 15, 2011
Simple and clear enough.
Specifically, the legislation mandates the CFTC Chairman Gary Gensler take the following immediate actions to eliminate excessive oil speculation within two weeks:
-- Establish speculative oil position limits equal to the position accountability levels that have been in place at the New York Mercantile Exchange since 2001.
-- Establish margin requirements of 12 percent on speculative oil trading to require investors to back their bets with real capital.
-- Classify as speculators each bank holding company, investment bank, or hedge fund engaged in proprietary oil trading; and
-- Take any other action the Chairman of the Commission determines is necessary to eliminate excessive speculation.
What is a Regulatory Ref -- with supposedly "no dog in the fight" -- supposed to do?
How about punt on first down ...
New Financial Rules Delayed
Wall Street Journal -- June 15, 2011
Certain parts of the Dodd-Frank financial law automatically take effect July 16 , though regulators have yet to issue final rules in affected areas.
On Tuesday, the Commodity Futures Trading Commission offered a six-month reprieve.
So 7/16/2011 plus 180 days, that puts the next due date about 1/16/2012. Thus the sternly worded letter ...
And now all eyes should be back in the center of the ring, trying to sort it all out -- rising prices, adequate supplies, people conserving, foreign demand, endless threat of wars -- are those elusively nimble CFTC referee commissioners.
They are just trying to find the best way to thread the needle -- of keeping everyone happy once again.
Meanwhile yet another legislative due date, has been extended and now lapsed again --- as the Main Street advocates are banging their own war-drums right out their door ...
What should the CFTC do ... listen to the advocates of Wall Street, listen to the advocates of Main Street?
Or simply "follow the law" as mandated by the Dodd-Frank financial reform act?
The Wall Street Wizards vs Market-based Regulations vs the sternly worded Letter ...
WHO will end up winning this one, and who will end up losing their shirts once again?
Decisions, decisions ... this one could end up being "decided on points" people, say tuned.
Afterall, it's your Economy. And it's your election, to win or lose too.
Maybe just maybe, the Refs should start throwing a few flags?
Afterall that's kind of why they are there ... supposedly.