Oil speculation

Groundhog Day as Obama "Probes" Oil Speculation

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We have another non-action action by the Obama administration, this time in the form of a probe on oil speculation:

Obama said he’s asked his attorney general and U.S. government agencies to work with state attorneys general to monitor for gasoline-price gouging, “to make sure that nobody is taking advantage of working families at the pump.”

Obama also said he’s willing to tap into the U.S. Strategic Petroleum Reserve “should the situation demand it” but declined to answer a question of what price would trigger a release.

Earlier France proclaimed oil speculation is unacceptable and Senator Nelson (D-FL), is calling for a hearing as well as a Congressional coalition on derivatives and oil speculation.

This is like 2008 Ground Hog Day. Back then we also had congressional testimony on oil speculation as well as bills introduced in Congress.

But then the financial crisis and recession happened, global oil demand collapsed, yet derivatives were never addressed. There is supposedly the ability for the CFTC to act, yet....this regulatory agency never does.

A portion of Senator Nelson's letter to the CFTC:

CFTC to curb oil speculators

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The Commodity Futures Trading Commission is proposing a new rule to limit energy speculation.

(everyone applaud)

The proposed caps announced on Thursday will have limited market impact affecting only a small handful of traders – about 10, by the CFTC’s own estimates – on crude oil, natural gas, gasoline and heating oil markets. The new limits are largely higher than the so-called “accountability levels” set by exchanges and which, if exceeded, trigger heightened surveillance.

Here is the actual proposed position limits rule where comments can be received up to 90 days.

This is the basics of the proposed rule: