Posted on 04/17/2012 5:32:47 AM PDT by Oldeconomybuyer
WASHINGTON – Under pressure to take action on rising gasoline prices, President Obama wants Congress to strengthen federal supervision of oil markets, increase penalties for market manipulation and empower regulators to increase the amount of money energy traders are required to put behind their transactions.
The White House plan, which Obama was to unveil Tuesday, is more likely to draw sharp election-year distinctions with Republicans than have an immediate effect on prices at the pump. The measures seek to boost spending for Wall Street enforcement at a time when congressional Republicans are seeking to limit the reach of federal financial regulations.
Obama plans to spell out his $52 million proposal Tuesday at the White House, where he will be joined by Attorney General Eric Holder.
(Excerpt) Read more at foxnews.com ...
The trade process allows the liquidity in the market. When I was a big user of natural gas, I had big tanks and a pump station installed and I had corporate purchasing guarantee those tanks would be filled at a certain price so I could run a casting operation with known energy costs. Maybe spot price was better, I don’t know. But I knew my cost and could plan accordingly. Without traders/speculators (liquidity), unexpected huge price changes would have screwed my end product pricing and shut me down.
For every trade on any stock, commodity, bond etc, there is a winner and a loser at the next tic. There’s always a seller for every buyer and increments are relatively small. Without traders and the at-risk dollars of those elite tennis club armchair players, price/cost stresses would gap to potentially disastrous situations.
Am I missing something here? Someone tell me why free market speculation is wrong. The only types of manipulation that are bad that I’m aware of is cornering a market like the Hunt brothers tried in silver some years ago(and they got screwed) and painting the ticker so as to create a trend - and that’s already illegal and the SEC will get you for doing it.
That’s the ticket!
Bring back the even/odd days to buy gas. Obama can create a new federal bureaucracy to police the stations, administered by Big Sis.
It’s the...umm...the Obama Even-Flo Gas Plan, named after the baby bottle.
'As Goldman Sachs believes that each million barrels of speculation in the oil futures market adds about 10 cents to the price of a barrel of oil, this means that in theory the speculative premium in oil prices due to speculation is as much as $23.39 a barrel in the price of NYMEX crude oil.
In turn oil analysts believe that every $10 rise in the price of crude oil translates into a 24 cent rise in the price of gasoline at the pump. Using the 24 cent rise in the price of gasoline suggests that each dollar increase in a barrel of oil equals about $.56 per barrel.'
When Lehmans went under it had contracts for millions of barrels of oil and gasoline. Speculators can and do influence prices. George Soros though speculation and short-selling almost destroyed the British financial system. Lehmans was destroyed by unregulated short-selling, not bad management. Speculators can have a behind-the-door agreement to sell between each other, running up a price, then selling, artificially inflating the price.
It happens all the time.
OBOMBA must be scared....he's doing this a little early ...figured he'd wait until August....and spending $52 million? UNNEEDED!!!!
More Government produces nothing but higher prices. Obama is a Communist who has no idea about wealth as he has lived the AA/Islamic/Marxist coattails his entire life.
Government produces nothing, but he wants more Government.
It’s the paradox of a Left Winger, they have no clue about anything but lies, theft and redistribution of wealth via taxation and regulation.
Obama will tank the nation, given another four years, I hate to say it but if we don’t even elect the slick Mormon Mitt, we are doomed.
Mitt is not what I want, but given the choice, like McCain, I have to vote RINO.
The Kenyan is on a path to make us broke and starving...he needs a cell, not AF1.
It is not the futures market that drives up the price of oil, it is tightness of supply relative to demand.
The same rules apply to Natural Gas trading that apply to crude oil.
It is a supply and demand issue. Open up more supply in the oil market and the commodity trading rules will drop the price as it has done for natural gas.
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