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The report pointed out that the Commodity Futures Trading Trading Commission, a financial futures regulator, had been mandated by Congress to ensure that prices on the futures market reflect the laws of supply and demand rather than manipulative practices or excessive speculation. The US Commodity Exchange Act (CEA) states, “Excessive speculation in any commodity under contracts of sale of such commodity for future delivery . . . causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity.”
Further, the CEA directs the CFTC to establish such trading limits “as the Commission finds are necessary to diminish, eliminate, or prevent such burden.” Where is the CFTC now that we need such limits?
Speculators were small entities before 2006. Since 2006 the ETF, hedge and private equity funds have tried to use the futures market like the stock market. These managers never traded futures before. They were essentially stockbrokers and mutual fund managers. All on a sudden they decided like subprime stupidity they must jump into commodity futures pits. They were actually driven by the competition to produce 100, 200 or even 300 % profits.
As these billions of dollars made its way into wheat, Corn, Soybean, oil, gasoline and other commodity futures, prices moved up. The CFTC increased the margin from $1000 to $1500. Normally in the stock market, you can only buy $2000 worth stock with $1000. Right now these moron fund managers are buying $140,000 worth crude oil with only $7250 maintenance margin money. For these funds, $7250 per contract is nothing.
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 budski
Capitalism at work.
We all created the monster - now we moan when it's out of control?
It's time to get back to basics.
Interestingly, the SEC moved in when it was alleged there had been stock manipulation of financial companies here but fail to act when it's about oil.
Wonder why... (sarc)
Originally posted by Grafilthy
And just so you know WHO wanted to be deregulated....
I bring you ....THE SCOUNDRELS.
Gramm's timing was perfect. Members of Congress wanted to go home for the holidays. They lumped H.R. 5660 — the Commodity Futures Modernization Act — into a package with several others and created H.R. 4577, the Consolidated Appropriations Act of 2000.
The bill was passed unanimously by the Senate in December of 2000. These men were Phil Gramm's stooges. Either that or they were in on the plan to fleece the oil goose and their fellow Americans.
Here is the problem with HR 5660. This “Commodities Futures Modernization Act of 2000” attempted to resolve a dispute over jurisdiction between the SEC and the CFTC. Two key elements of the bill appear to have a direct impact on the markets and the financial services industry, specifically investment banks and hedge funds. The act created the “Enron loophole.”
That loophole exempts energy speculators who make trades electronically from U.S. regulation. Some people argue that the unregulated energy speculation, made legal back in 2000, can account for much of the inflated rise in oil prices.
Originally posted by Keyhole
reply to post by ChocoTaco369
Funny then that this sort of thing never happened to oil prices until the US government unregulated the futures market?
Oil prices used to rise and fall nice and smoothly while it was regulated.
In 2006 when the CFTC lost more regulating control over the energy futures is when oil prices, shortly afterward, started skyrocketing.
I don't think so!
Maybe Morgan Stanley is buying more oil because it keeps skyrocketing every day, and they are stockpiling more and more $140/barrel oil because they fear it'll go up to $200/barrel and they won't be able to afford it
Revenue ▲ US$ 84.12 billion (2007)
Net income ▲ US$ 3.209 billion (2007)