Senators Question Weak Oil Speculation Rule - ThinkProgress

... the real reason we have seen spikes in commodity prices such as oil and various food commodities (corn, wheat etc) over the last few yearss is because of excessive speculation in commodities. If trading in commodities is not limited to commercial buyers of commodities (entities which actually buy commodities to conduct their normal business) with strong limitations on speculators in commodities (entities that do not use commodities in their normal business but that are just betting on the price of certain commodities) we will continue to see oil and food be subject to the gambling activities of commodities speculators. One of the big players in this arena is Goldman Sachs who was hording oil during the 2007-2008 run-up of prices in oil.

I urge people to email your Senators and Congessmen to demand severe limitations on commodities speculation. This will have to be done with legislation as the Commodities Futures Trading Commission is composed of complete toadies of the Wall Street BAnks and Brokerage houses who make billions from commodities trading (and who also speculate in commodities for their own accounts).

What we need, in addition to real position limits, is a financial transactions fee. This would cut down on the speculative trades not only in commodities but also in common stocks. You can email your Senators and Representatives at http://www.congress.org


http://thinkprogress.org/green/2011/10/18/346567/senators-question-weak-oil-speculation-rule/

The Commodity Futures Trading Commission (CFTC) is poised to vote on position limits for oil trading, but some senators are concerned that the rule will be too weak to diminish oil speculation. Sens. Bernie Sanders (I-VT) and Maria Cantwell (D-WA) both wrote letters to CFTC Commissioner Gary Gensler, asking him to take stronger steps to curb financial speculators like Goldman Sachs and Morgan Stanley. Sanders called the expected rule “simply unacceptable“:


Unfortunately, if recent reports in the media are correct, the final rule on position limits, as currently drafted, will do little or nothing to lower prices and it will not eliminate, prevent or diminish excessive speculation as required by the Dodd-Frank Act. At a time when the American people are experiencing extremely high oil and gas prices, this would be simply unacceptable.

Financial institutions have grossly distorted oil and other commodity markets that used to be dominated by actual buyers and sellers of the underlying products. The Dodd-Frank Act mandated that the CFTC establish stronger limits on financial speculation in commodity markets by Jan. 17, 2011. Nine months behind schedule, the CFTC is planning to establish position limits that would allow a single speculator to control 25 percent of the physically deliverable supply of oil, and to control 125 percent of the cash-settled supply.

Sanders also called on the CFTC to ban “speculative commodity index fund trading,” citing the new report by Better Markets that identifies commodity index funds as the “primary drivers of excessive speculation.”
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The new regs may only serve to weed out the smaller players, solidifying the control of commodities into the vary large speculative firms.

In effect, creating commodity monopolies that will drive prices even higher.

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