Comments on: Speculators not causing energy prices to rise

By: Art Kling

Art Kling — Wed, 17 Sep 2008 14:15:46 +0000

My bad. Did not mean to imply otherwise. I just wonder if the speculation that has been getting the blame for rising oil prices since 2005 is due in part to trading that is beyond the scope of the CFTC and, therefore, not addressed in their report.

By: Brian

Brian — Wed, 17 Sep 2008 02:01:46 +0000

For full disclosure... Art's comment are direct quotes from this column by Henry Banta and a 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices.”

By: Art Kling

Art Kling — Tue, 16 Sep 2008 17:52:04 +0000

I’m not convinced.

Until quite recently trading on futures markets was regulated by the CFTC. Trades on regulated markets are subject to reporting requirements. Traders are required to report large trades to the CFTC, which has the responsibility of limiting excessive speculation. However, concurrent with the dramatic increase in speculative trading of energy futures, there has been a shift of this trading to unregulated commodity
exchanges.

Essentially this shift is the result of an exemption written into the Commodity Futures Modernization Act of 2000 at the behest of Enron.

In contrast to trades conducted on the NYMEX, traders on unregulated OTC electronic exchanges are not required to keep records or file Large Trader Reports with the CFTC, and these trades are exempt from routine CFTC oversight

By: walt moffett

walt moffett — Tue, 16 Sep 2008 16:02:56 +0000

Dunno about that, between the state AG’s and the class action lawyers, we’ll probably see some operators paying Dane geld