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If there is any doubt that it is speculation, not the supply and demand for oil, that is driving up the price, look at this week’s history of oil prices. After Bush announced that he was rescinding his father’s executive order and permitting off shore drilling and after OPEC announced a weakening of oil demand, the futures market price dropped $15 per barrel. No new oil gushed through the system. The speculators just switched their bets from up to down.
The FCTC had allowed those in the oil biz to buy and sell oil futures — essentially bets on how the price will change — but restricted investment by speculators. After the brokerage houses went offshore so as to be able to indulge their passion for a quick buck, the total traded in oil futures soared from $13 billion in 2003 to $260 billion now. It is this tail that is wagging the dog in pushing up the price of oil and gas at the pump.
The Democrats are pushing legislation to restore the status quo ante and stop the brokerage firms from playing the oil futures game. Their bill would apply the restrictions on oil futures’ purchases to domestic American companies even if they trade off shore.
Originally posted by RRconservative
Stop giving oil speculators reasons to think prices will go up.
Start drilling in the 1.1 BILLION acres that are currently off-limits.
Bush lifted the National moritorium on drilling, it is time for Congress to do the same.
End the Pelosi Premium!
Originally posted by Grafilthy
I'm tired of "oil speculators".....
I want names, companies.......info on these guys.
They need to be exposed to the people for what they have been up to.
Originally posted by Rook1545
it will not affect anything for the next 5-7 years, possibly 10.
Originally posted by observer
I agree that it should stop but I certainly don't see how that will happen unless the government steps in and even then I am not sure what they could really do.
As that US Senate report noted:
“Until recently, US energy futures were traded exclusively on regulated exchanges within the United States, like the NYMEX, which are subject to extensive oversight by the CFTC, including ongoing monitoring to detect and prevent price manipulation or fraud. In recent years, however, there has been a tremendous growth in the trading of contracts that look and are structured just like futures contracts, but which are traded on unregulated OTC electronic markets. Because of their similarity to futures contracts they are often called “futures look-alikes.”
The only practical difference between futures look-alike contracts and futures contracts is that the look-alikes are traded in unregulated markets whereas futures are traded on regulated exchanges. The trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron and other large energy traders into the Commodity Futures Modernization Act of 2000 in the waning hours of the 106th Congress.
The impact on market oversight has been substantial. NYMEX traders, for example, are required to keep records of all trades and report large trades to the CFTC. These Large Trader Reports, together with daily trading data providing price and volume information, are the CFTC’s primary tools to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. CFTC Chairman Reuben Jeffrey recently stated: “The Commission’s Large Trader information system is one of the cornerstones of our surveillance program and enables detection of concentrated and coordinated positions that might be used by one or more traders to attempt manipulation.”
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. In contrast to trades conducted on regulated futures exchanges, there is no limit on the number of contracts a speculator may hold on an unregulated OTC electronic exchange, no monitoring of trading by the exchange itself, and no reporting of the amount of outstanding contracts (“open interest”) at the end of each day.” 1
Then, apparently to make sure the way was opened really wide to potential market oil price manipulation, in January 2006, the Bush Administration’s CFTC permitted the Intercontinental Exchange (ICE), the leading operator of electronic energy exchanges, to use its trading terminals in the United States for the trading of US crude oil futures on the ICE futures exchange in London – called “ICE Futures.”
Previously, the ICE Futures exchange in London had traded only in European energy commodities – Brent crude oil and United Kingdom natural gas. As a United Kingdom futures market, the ICE Futures exchange is regulated solely by the UK Financial Services Authority. In 1999, the London exchange obtained the CFTC’s permission to install computer terminals in the United States to permit traders in New York and other US cities to trade European energy commodities through the ICE exchange.
Give me some proof, any proof, that this drilling will lower oil prices in the foreseeable future.
Short answer, it will not affect anything for the next 5-7 years, possibly 10.
The right wing always seem to think that DRILL NOW is the answer, if they did their homework, they would know, it is not answer at all, it is a diversion.