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Edwynn -> RE: Obama blames speculators for rising fuel prices (4/20/2011 12:16:36 AM)
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FR
The President is not wanting to control the stock market (crude oil futures are not sold there). A regulatory agency , such as the SEC, can indeed tell somebody what they can and can't buy, at least at certain times (insider trading laws, e.g.), it's not being commie, it's called regulating markets.
Rather than grandstanding and using this very serious problem in a speech, one thing Obama could do is just tell the CFTC to do their job better, i.e. to reverse the non-enforcement of Wendy Gramm when she was head of the agency. On the day before Clinton took office she enacted an energy group's request to allow certain energy futures contracts to to transpire privately and be excluded from the requirement to trade through the regulated NYMEX exchange. Clinton adroitly averted reversing the situation while in office. Then, again at the last hour, Wendy's husband Phil Gramm inserted a deeply buried paragraph tucked into a 262 page bill that had been already approved, without any possibility for congress to look at it, and then again was able to slip it into a 11,000 page omnibus appropriations bill. So it got signed by Clinton. The law was the The Commodity Futures Trading Act, and the little paragraph tucked in was what later Became known as "The Enron Loophole."
What this did was to legislatively codify the earlier CFTC action, so as to prevent any later president who might have an honest CFTC head to reverse it. This law specifically excluded a whole slew of classifications of futures contracts, swaps, etc. from any oversight by any agency whatsoever, ergo, ultimately completely beyond any President's control at all. So actually, contrary to what I said in the second paragraph, Obama telling the CFTC to do their job better actually wouldn't accomplish a whole lot.
Not only this, the new law also allowed traders to establish their own exchanges which again, unlike NYMEX, would be completely exempt from any regulation or oversight whatsoever. This is how the Intercontinental Exchange came to be. The majority of crude oil futures contracts have taken place on the ICE since 2006. Completely unregulated, and therefore impossible see the intentional manipulation or by whom.
One simple aspect of this not concerning outright manipulation is that all this hot speculation means that a large component of the price of oil is not set by demand for oil, but by the demand for these contracts by speculators. A single contract could be traded hundreds of times. The oil companies have in the last 30 years gotten back into refining and retail selling, so even with out speculating themselves (which they in fact do) they are the beneficiaries of the futures trading related price increase.
As to the FTC's job of preventing anti-competitive mergers, Reagan put in a de-reg commissioner and told him to relax all that. The mergers started right away and have continued ever since. What are now ExonMobil, Chevron, BP, used to be about 15 quite sizable companies. Be serious folks, when the two largest, Exon and Mobil were allowed to merge, you should have known that; the FTC is a joke, and; this could not mean anything good down the road.
So no, much of the speculation is not under any agency's purview, and the breaking up of mergers is much much harder than preventing them in the first place. Which is to say 'not gonna happen' with an agency that keeps allowing them.
There is so much more to this.
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