In reversal, federal regulators now propose to limit oil and gas commodities

[RamboLiberal]

Source: Washington Post

With the price of gas at the pump at its highest point in well over a year, federal regulators moved Thursday to prevent excessive speculation by financial traders from driving the cost of oil even higher. The effort to adopt new limits on the trading of oil and other energy commodities is a sharp reversal after years when regulators left those markets alone.

The proposal from the Commodity Futures Trading Commission, which oversees oil and energy trading, would introduce new restrictions on what the largest traders can do. Concerned that some firms can amass such large holdings in energy commodities that their trades can have an outsize effect on the price of gasoline, heating oil or natural gas, officials said they would prevent traders "from establishing extraordinarily large positions."

The proposed limits highlight a newfound skepticism among regulators toward the financial sector. Big banks and Wall Street firms have transformed the marketplace for energy commodities into a high-stakes casino for speculation, a departure from its original role as a place where airline and shipping agencies, for instance, could buy contracts to keep the price of their fuel steady. Regulators are concerned that this betting has created too much volatility, sending the price of oil and other energy commodities up and down violently.

Oil prices hit a record high of $145 a barrel in 2008 before plunging to $33 a barrel in a matter of months. With the slow economic recovery, they have risen to about $80 a barrel. The instability in prices is caused by several factors, including overall economic conditions, the decisions of oil-rich nations and the weather -- in addition to financial speculation. So it remains difficult to determine how much any regulatory proposal would affect these price swings.

The agency's plan sets the new trading limits high enough that they would affect only 10 firms, agency officials said. They would not name the traders.



Read more: http://www.washingtonpost.com/wp-dyn/content/article/2010/01/14/AR2010011404472.html?hpid=topnews

[FreakinDJ]

1. Now thats Change I can Beleive in

[denverbill]

3. It's a starting point anyway. n/t

[icee]

16. Won't happen--

[Auggie]

20. Care to elaborate on that cynicism?

[icee]

25. First, this merely my opinion. Obama is in a precarious position

politically. He has now departed from more political promises than any President in history. He needs to do something to restore Progressive faith in him. The promise of control over oil speculators and the bank tax, etc are examples of his attempt to restore himself with the Party. They are being done at a time when he needs Party backing to help him with Obamacare--a disaster as well as other dubious platforms. Once these challenges are decided, you will see him back off or not fight hard for these pacifiers he is offering. Maybe I'll be wrong. Who knows? Contact me again after we have a denouement. Good day.

[Robb]

40. "He has now departed from more political promises than any President in history."

:rofl:

[Gman]

41. Horseshit

"He has now departed from more political promises than any President in history"

I wish people would quit pulling stuff like this out of their asses and posting it like they somehow know what they are talking about.

[zogtheobvious]

60. Huh.

Obama's kept his promises, huh? Well, take a look HERE!


http://www.politifact.com/truth-o-meter/article/2010/jan/14/rating-obamas-promises-1-year-mark/


HMMMmmmmmmmmmmmmm waitaminnit WHAT??

I went to that site intending to use it to express my Liberal outrage and club you over the head with it... and ended up getting smacked in the fact (meant to type "face" but as typos go, it works) by it myself, instead. Obama, it appears, has kept a lot more promises than he's broken. Washington reality being what it is, he's simply NOT going to be able to do everything he said he could. That said, he's evidently done much, much better than we hear about in the Mainstream Media and, I'm sorry to say, Liberal Blogs.

I will always and forever remain bitterly disappointed by his refusal to hold Bush and his cronies accountable for their crimes, including torture and "leading" us to an illegal war. I will always be disappointed that he appears to have continued the torture policies and left much of the Patriot Act intact. Those are huge, and shouldn't be ignored; however he has made much progress (or at least has progress in the works) on many, many more issues than we hear about. By not acknowledging those, we play into the hands of the Right.

Obama and his people are guilty of not tooting their horn on the successes they had. There would most likely be a lot less liberal angst if they had been playing better PR. I am guilty of not doing my homework better and of letting the fact that I've always been able to find facts at sites like this one make me complacent and stop digging. It seems that I must modify much of the griping I've done about Obama in the past and pay better attention in the future. He is FAR from perfect, and I will dig more diligently in the future (including researching some of the facts presented at the link I posted) but appears I must consider myself once again,

-An Obama supporter

[Gman]

62. Thank you

like I said, they pull stuff out of their asses.

[Mari333]

45. agreed. lots of purty talk. when I see it happen, then I will believe it.

[icee]

46. I've been engaged in politics since 1966. I've never seen anything

like it. Beware of the laughing Robb. Live long and prosper.

iccy

[bjobotts]

47. You are so cynical maybe you should disengage from politics.You condemn so much

[bjobotts]

48. Rememjber Bush's compassionate conservatism.How did U expect Obama could survive

[bjobotts]

49. Do you even bother to vote..I mean what's the point...they all lie. Beating the billionaires-right

[bjobotts]

50. I'm surprised anybody is doing anything to stand against the corporatocracy

[bjobotts]

52. Sooner or later we all must face we cannot sustain perpetual constant growth against finite resource

[bjobotts]

53. Exploitation by the wealthy will always result in their own destruction.

[bjobotts]

54. Without balance...we die. But democracy is in our genes---it's why we have hope

[bjobotts]

55. Eventually the slaves will revolt and the rich killed by their own bodyguards

[elehhhhna]

59. and Bush's "NO NATION BUILDING" pledge, which only applied to This one, evidently...

btw, this ain't twitter -- you can post a headline AND a message! Welcome to DU.

[yurbud]

63. amen

[NJmaverick]

2. Very good this change should have taken place years ago

The artifically high price of oil helped trigger the economic crisis.

[sammyday]

51. That does have something to do with it

I must agree that this is part of the puzzle - good for the rich and those how can profit from the turmoil though.

[PSPS]

4. Many good things have been "proposed." I'd like to see some follow through on something.

[Mithreal]

23. Why are DU'ers still counting chickens before the hatch?

[westerebus]

29. Because they think they know why this chicken crossed the road?

I have a reasonable expectation that the chicken handler's will explain it all this Sunday on Meet the Press. Or this evening on Blomberg.

Depending of course on which side of the road the chicken handler's were standing on at the time.

[Mithreal]

31. If they spin the chicken too much, there is gonna be a mess.

[zbdent]

39. just remember not to thaw it out before use ...

unless you're testing jet windshields ...

[westerebus]

56. Have you ever seen a frozen chicken cross the road? LOL

[Soylent Brice]

5. good news. am i on the right site?

[BumRushDaShow]

6. Make them take delivery of actual product

and then that will prove that they are not just gambling.

[FreakinDJ]

7. They just "Rent" the ship @ $40,000 a day

[LarryNM]

43. Good Point

This would separate those actually involved with the product from those just speculating. FWIW, how about Rationing some oil and gas products? It was done in the early 1940s, and we were at War then too.

[groundloop]

8. Good news.

I'm sure my libertarian buddy won't like this, for some strange reason he still believes the "markets" will regulate themselves. In any case this is a good move.

[newspeak]

61. "the markets will regulate themselves"

was he around during the S&L theft, or Enron or the mortgage scandal or the hedge fund debacle? Or maybe, he doesn't read or choses to read only those articles that say "the markets will regulate themselves."

[Tumbulu]

9. Thank goodness! Thank you President Obama!

Thank all of us who helped get him and the dem's elected so changes like this could begin.

Step by step I will keep trying to sweep up this seemingly endless mess.

edited to correct spelling

[indypaul]

10. Does anyone remember

The "Commodity Futures Modernization Act of 2000?"
Or better known as the "Enron Exemption" Compliments
of Senator Richard Lugar (R-IN) and Former Senator Phil
Gramm(R-TX). And although they had additional "bipartisan"
help in December 2000 getting this abomination passed.
This situation has been allowed to remain un addressed for
ten years. Does anyone really think Congress will act to
prevent rampant speculation in this market? Non-users should
be restricted from acquiring an excessive number of contracts
in this market. What that number should be is debatable but
some restriction is needed NOW.

[lib2DaBone]

17. The good Sen Gramm and his wife were involved in a lot of shady deals

[Enthusiast]

34. And like

LIEberman he actually resembles a cartoon character.

[Dappleganger]

11. It's about time!

[SandWalker1984]

12. That's closing the Goldman Sachs barn door after the cash cow left

But Masters also argues that traditional speculators -- which include The Goldman Sachs Group (NYSE: GS) whose oil analyst forecasts $200 a barrel oil -- are able to take advantage of a loophole in regulations of the Commodity Futures Trading Commission (CFTC) which permits unlimited speculation.

This so-called "swaps loophole" exempts investment banks from reporting requirements and limits on trading positions that are required of other investors. The loophole allows pension funds to enter into a swap agreement with an investment bank, which can then trade unlimited numbers of the contracts in futures markets.

While nobody seems to know how much of the price of oil is due to speculation, if the swaps loophole closed and the price of oil dropped, we'd have a pretty good guess. In the meantime, it would be interesting to know how much money Goldman is making in this speculation. This would not be the first time -- Ben Stein in the New York Times accused Goldman of profiting from its bearish forecast on subprime as well.

http://www.bloggingstocks.com/2008/05/21/oil-at-130-partly-due-to-goldman-sachs-betting-on-200-oil/

[David Zephyr]

33. LOL. How true.

Here we are one year after the Democrats have the White House and super majorities in both houses in Congress and this is now being considered? Now?

I'll believe it when it happens.

[Sunnyshine]

13. The agency's plan sets the new trading limits high enough that they would affect only 10 firms-

It is a good start, but that last sentence looks a lot like a industrial loop-hole. Why not disclose the name of these traders?

[defendandprotect]

14. Do we get a refund on the last period of SPECULATION game they played?

Should have been a Windfall's profit tax -- !!!

Even now --

But -- congratulations for some signs of reigning in corporate crime and corruption!

[BlueJac]

15. This does not mean it will happen......

I have heard lots of good things only to have them fail to get enacted!!

[lib2DaBone]

18. Not to be too cynical...

I heard they were not going to renew the Patriot Act, they were going to prosecute for torture and they were going to revisit the credit card laws written by the credit card companies?

[Autonomy]

19. This is the change I voted for

Regulation of financial industries that have proved repeatedly to cause turmoil in the economy. Obama is definitely earning my vote in 2012.

[INdemo]

21. People forget very quickly and the corporate media was not about to remind us

that when the energy bill was drafted by the oil companies and Dick Cheney behind closed doors in 2004 and passed very quickly not much was said about the bill except it subsidized oil companies..Well in that bill the restrictions or regulations on energy speculating was all but erased and guess what..from that point on we were gouged even more ..Now with the majority of congress being corporate leaning politicians,does anyone really think for one minute that this will really go anywhere except in the trash bin ? Right beside the healthcare reform legislation...
Not gonna happen...

[Enthusiast]

35. This then will be another way to

separate the wheat from the chaff. Those voting against this should considered the enemy. No discussion necessary.

[varelse]

22. It's good to see Federal regulators empowered to actually *regulate* stuff eh?

:)

[proudohioan]

24. I don't know whether this proposal had anything to do with it......

but gas prices at my local Sunoco, which had been $2.79 on Wednesday, dropped to $2.60 per gallon this afternoon.

One can only hope......

[Andy823]

26. Oil prices

Are down around $5.00 a barrel today from last week. Maybe it's working. It would be great to see these crooks who have been making a fortune by speculating on oil prices get stuck with huge supplies and can't manipulate the prices up, and have to sell for a loss! As others have said though I need to see the real proof before I get my hopes up to high!

[derby378]

27. This sounds good...

It's a step in the right direction.

[Lugnut]

28. It's about time.

Just do it!

[The_Casual_Observer]

30. Big oil companies call foul whenever this comes up.

The old logically contorted reasoning is that any regulation would end up driving the price higher for X Y & Z reasons.

[Enthusiast]

32. This is the LEAST we should expect.

Why shouldn't the government work on behalf of the people/consumers?

[Homer Wells]

36. About Damn Time!!!!! NT

[w4rma]

37. Extremely good. (nt)

[ooglymoogly]

38. The proof is in the put-ing. kr nt

[MannyGoldstein]

42. All Thanks To Martha Coakley

If she weren't getting hammered here in Mass, there'd be no suggestion of doing this.

[pleah]

44. K&R

[waronbanks]

57. Just to clarify

A proposal is not action...just words. It would be nice to see actions that actually reflected the words we hear coming from this administration. Thats sorely lacking. I'll be impressed when it becomes actions.

[DisgustedInMN]

58. Great idea... let's wait..

..for it to be delivered, BEFORE we hang the Mission Accomplished banner, eh people?

Lots of pretty rhetoric and very little actual "change" is getting tiresome.

Show me, don' tell me.