[vaseline2008]

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

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."

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."

[Plantagenet]

When the democrats and Bernie Sanders and Obama all say speculators for manipulating the oil market, they are just setting the stage for Obama to release millions of barrels of oil from the strategic petroleum reserve in an attempt to manipulate the oil market.

I predict Obama will release 20 million barrels of oil from the SPR the day after his poll approval numbers go under 40%.

[radon]

1) collapse the demand in China, India

Any other country would also do, every little helps.

How about:
5) reduce the mileage of useless driving
6)...

[MD]

if the market economy is to work, futures trading must be allowed.

it's as obvious as the ass on a goat...

[Lore]

if the market economy is to work, futures trading must be allowed.

it's as obvious as the ass on a goat...

The only problem is, with that, it's not working. It works just fine in an infinite resource scenario.

[SeaGypsy]

Care to elaborate Lore? Is it not working because gas is 4 bucks? What about when it gets to 10 in a few years? The goat has horns.

[Lore]

Care to elaborate Lore? Is it not working because gas is 4 bucks? What about when it gets to 10 in a few years? The goat has horns.

It's obvious, modern free market capitilism is a ponzi scheme. Built on the premise of pyramidal growth. When it faulters, you get all kinds of deviant behavior. Like phony credit default swaps, pipe lines to no where, wars in the Middle East, and so on.

[SeaGypsy]

Those are facts not mitigated by non-free trade. What realistic option is there? I totally agree with your sentiment. But can't see a solution which is politically viable or likely to maintain broad distribution at whatever price. Fixing exchanges is impossible under fiat systems as there can never be complete confidence in a currency or those printing it.

[Lore]

You are right, the system is too far embedded into the way we now conduct business. That's not to say we'll have a good end to this.

I think it can be summed up in this exchange from the movie "Trading Places".

Billy Ray: No thanks, guys, I already had breakfast this morning.

Mortimer Duke: This is not a *meal*, Valentine. We are here to TRY to explain to you what is we do here.

Randolph Duke: We are 'commodities brokers', William. Now, what are commodities? Commodities are agricultural products... like coffee that you had for breakfast... wheat, which is used to make bread... pork bellies, which is used to make bacon, which you might find in a 'bacon and lettuce and tomato' sandwich.

[Billy Ray turns and gives a long look at the camera]

Randolph Duke: Randolph
[continuing]

Randolph Duke: And then there are other commodities, like frozen orange juice... and GOLD. Though, of course, gold doesn't grow on trees like oranges.
[chuckles]

Randolph Duke: Clear so far?

Billy Ray: [nodding, smiling] Yeah.

Randolph Duke: Good, William! Now, some of our clients are speculating that the price of gold will rise in the future. And we have other clients who are speculating that the price of gold will fall. They place their orders with us, and we buy or sell their gold for them.

Mortimer Duke: Tell him the good part.

Randolph Duke: The good part, William, is that, no matter whether our clients make money or lose money, Duke & Duke get the commissions.

Mortimer Duke: Well? What do you think, Valentine?

Billy Ray: Sounds to me like you guys a couple of bookies.

Randolph Duke: [chuckling, patting Billy Ray on the back] I told you he'd understand.

[Pops]

I wouldn't be surprised in the least if there is a $10 Stupid Tariff imposed on the electorate for thinking the Market (cue celestial choir) is "Free". The Financiers have struck a deal with a minority of the electorate as follows:
We get to dictate what our neighbors do in the bedroom if we pretend that unregulated markets are free.

But,
Money=Power, Power=Control, Control≠Freedom.


Still, speculate all you want but if you can't buy and hold enough product off the market (a la the Hunt brother's silver play) you aren't going to change the price much. Producers can do that but not speculators.

When demand is higher than supply the price rises until someone is willing to sell a little more for a little less and the price comes down. So either (1) someone is hiding lots of oil in the ground these last 10 years (2) it is unprofitable to provide more supply or (3) there isn't a "little more" to sell. None of those are explained by speculation, especially $50 worth.

Look at the study cited in the OP article, it's pretty good. But all it says is "financialization" and speculation rose as oil price rose. It tries to draw a parallel between current oil prices and Enron but I'm going to say flat out that any prosecutor who could make that case would be set for life politically. None have stepped forward.

I really have a dislike for the non-productive members of society (financiers) and the Money-For-Nothing crowd is betting heavily on the ultimate coup at the moment. I think if successful they will certainly make make sure to eliminate whatever regulations there are to regulate gambling and ensure the "freedom" of the market.

[Plantagenet]

dup post

[Outcast_Searcher]

Just ONE TIME, I'd like to see the idiot Bernie Sanders (and his ilk) offering commendations, or at least a public word of thanks, to the "evil speculators" when the price of oil PLUNGES.

Yeah, that'll happen -- as soon as pigs fly and first world countries quit living on fiat currency.

Until we see the first shred of balance and reasonableness in their "blame the speculators" conspiracy theory BS -- I'd estimate the IQ of (as named so eloquently earlier on this thread) the ass of a goat as higher than the likes of the (dishonorable) Bernie Sanders crowd.

[Lore]

Right,... lets give money to the monkey in the middle for nothing. A truely free maket doesn't require speculators.

[SeaGypsy]

So given storage constraints and volume handling capability, who would replace these hedge funds etc? The only alternative seems to be government takeover. Governments worldwide have been heading in the opposite direction to this for decades, why would they turn around now?

[Lore]

So given storage constraints and volume handling capability, who would replace these hedge funds etc? The only alternative seems to be government takeover. Governments worldwide have been heading in the opposite direction to this for decades, why would they turn around now?

Call me confused, but why does that require a bet?

[SeaGypsy]

Export Land Model dictates an introspectivity on behalf of oil exporters which is going to get a stranglehold on supply at some point in the not too distant future. But nationalization is no panacea and hasn't been shown to be an effective mechanism for these economies. Didn't Mexico pass it's use/ export balance threshold a couple of years back? But they are still exporting oil, no? Internal cuts resulting in internal turmoil are the order of the day. Along with BAU at all costs in terms of maintaining exports. It seems beyond government to manage the mega corps now; more the other way around.

[Lore]

We must cleanse the market now and expunge all who would corrupt it through there dysentery involvement.