Posted on 06/19/2008 6:12:21 AM PDT by jveritas
US regulators have announced plans to impose limits on oil trades overseas.
The US Commodity Futures Trading Commission said the London-based electronic exchange would have to comply with US rules.
The move comes as oil prices notch up record highs, amid fears that speculators are distorting the market. As a result, fuel costs have shot up hitting the global economy. Airlines have been hit badly, with near record losses expected for 2008 in the US.
US airlines were forecast to report $10bn (£5bn) of losses this financial year as sky-high fuel costs erode profits, according to the industry group Air Transport Association (ATA).
Oil prices slipped from their record highs near $140 a barrel reached during Monday trade as investors were cautious ahead of plans by Saudi Arabia to increase production in July.
US sweet, light crude finished down 60 cents at $134.01, while London Brent settled 99 cents lower at $133.72.
Read more at:
http://news.bbc.co.uk/2/hi/business/7460310.stm
Getting them out of energy mkts is THE easy short-term fix here. All it takes is ONE lousy ruling from the gutless clowns at CFTC.
Longer-term? Drill, nukes, coal, shale, capacity, and tell the radical socialist enviroturds to go straight to hell (won't happen, of course, but one can dream...)
Also, utilities want to build more nukes, but the red tape really drags to a 7-8 year lag of permitting and 100's of millions in the meantime....like they don't already know how to build and operate a nuke plant?
The GOP has been asleep at the wheel from 2000-2006 and now we are paying for it through the nose. It's like this is exactly what they wanted!!
Let's not even get into the federally mandated illegal invasion / sub-prime orgy fiasco where trillions vanished into overpriced unneeded (empty), now deflated housing.
And these weinies will want someone (US tax payer) to bail their asses out we hear “Margin Call gentlemen”.
Esp with his nuke plant comments.
One can only cross one's fingers...
Why is it the Congress allows (votes)such crap and who's minding the store????
What, I wonder, will it take to convey the message of our deep displeasure to members of Congress? A block-long gallows constructed within sight of the Capitol building, perhaps?
91% of the votes for increased US Energy production came from Republicans, 87% against any increase came from Democrats.
How about, finally, we hold the Democrats, who filibustered Energy bill after bill after bill, accountable for their actions rather then create a totally false moral equivalence between the two party's?
“I heard on FNC, the other evening, that one U.S. Congressman wants to introduce legislation that anyone transacting trades in oil, has to take physical possession of the oil before being able to trade the oil to someone else.”
Gee, that will be hard to get around. I’ll rent space in my tank farm for 1/10,000 of a second for each trade. $50 per trade, and exchange the oil for like-kind oil somewhere else and back again.
” futures trader”
The futures market exists because Congress kept accusing “evilll oil companies” of price fixing. So they created an auction where the price is the price.
Turns out the evilll oil companies were keeping the price below market. Whooops.
I guess you didn’t witness the recent hearings on commodity speculation. With deregulation 10 years back came a new definition of ‘commercial’ representation.
Whereas before a commercial entity was defined as commercial producer or consumer for taking positions in futures for insurance and hedging reasons, the definition was loosened to allow hedge funds, pension funds and private equity entities to be represented as ‘commercial’ by investment banks.
The significance of the loosened definition is that it allows an unlimited position in futures and this is turn allows a huge distortion in the market.
CALPERS is one of the biggest distorters. Represented by Goldman Sachs (GS) they have taken huge positions in oil and gas futures via GS thereby driving up prices. CALPERS produces no oil nor is a commercial consumer of oil, so why are they allowed to take unlimited positions in these commodities?
The deregulation of commodities was in line with broad deregulation of markets. When CALPERS and other pension funds suffered a blow in the dot com crash, they reallocated capital to commodities. Over time as the huge influx of retirement contributions went through investment banks into commodities the price of those commodities became firmly rising; supply of positions was far outstripped by demand.
The hearings revealed that pensions did this because there was no other investment vehicle for them to recover their dot com losses and remain solvent to meet the obligations of their retirement plans.
Back when oil was selling for $20 a barrel there was trade in futures contracts between actual producers and commercial consumers. Now there is trade among many larger players that the market was never designed to accomodate. Only about $25 of the $130 per barrel cost these days is attributed to rising demand from China and India, so that roughly $70 to $80 is attrributed to speculation.
But the real puzzling part of all this development is found in the love-hate relationship with oil. If oil gets set back to about $50 a barrel, then most all of the energy innovations and developments will be wiped out as the profit potential disappears under cheaper oil.
It’s a real enigma and makes a difficult call.
O'Bloviate, regarding energy mkts, has already demonstrated repeatedly that he's just a crypto-statist with a microphone.
So, my comment was based upon RINO’s jumping ship and the GOP not publicly holding the RATS feet to the fire on the Energy Bill filibustering....something the MSM ignored completely too, huh??
Remember also that investment banks ARE classed as ''reporting traders'', aka ''large specs'', when trading for their own accounts, but as ''commercials'' when acting as agent for a client.
Reclassify the ''acting-as-agent'' nonsense to what it should be, ''large spec'', give the pension funds 6 months to get out of the mkt, and you will have knocked $40-50/bbl off the price of crude.
Likely more, come to that. Futures mkts always overshoot, upside or downside.
Ah, thanks for the memories.
If Obama gets elected and smacks down these energy commodity markets (I invest in coal and energy) he will be crowned as king.
I much prefer a Republican (Geo Bush) does the dirty work. I doubt he will
Indeed, how would the socialists in the USA legislate, command and control the ICE market in the U.K.
https://www.theice.com/homepage.jhtml
The socialists demagogues in the US see this as a golden opportunity to expand their totalitarian ideals. Best example of course if House socalists aka democrats led by lunatic M.hinchey calling for government take over of the oil industry. Recall of course their failed effort to take over the entire health industry.
We’re on the same page but what do you think of ‘habits’ and such if oil gets back down to say $75? I mean do SUVs get a reprieve?
I guess what I am saying is that high priced oil does get the politics rolling on energy independence. That’s why I called it a love-hate relationship.
How can the US Commodity Futures Trading Commission regulate trading on a foreign exchange? The foreign exchange would probably follow commonly accepted practices since the management are reasonable, but they don’t have to follow US Commodity Futures Trading Commission recommendations.
He, Dick Morris, basically said that the London ICE was formed by investor/speculators that left NYMEX and formed their own commodity exchange because of the regulations. In London, they have no regulations. He said that he had talked to some of these people and they not only admitted, but bragged, on the fact that they ARE in fact manipulating the markets ever upward for their own gain. The Dubai market is essentially the child of NYMEX speculators doing the same thing in a different place. They are purposefully driving up the price of oil without regard to market forces or usage levels..............
I don't see a short-term renewal of the SUV craziness for ANY reason, even if crude drops to $75/bbl. Between crude and the misallocation of credit over the past 6-7 years, not to mention the accumulation of private sector debt, the avg citizen will be a LOT more cautious, says I.
Could be wrong, of course.
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