Government May Try to Curtail Oil Speculation

U.S. regulators may start stepping in to curb speculators in the energy markets, which would include oil and gasoline. The chairman of the Commodity Futures Trading Commission, Gary Gensler, used the rapid rise and fall of oil and gas prices over the past year as a prime example of the need for new regulations that would stop speculators in these commodities.

While the commodities would still be traded, there would be new rules regarding how they could be traded and who could trade them, in an attempt to curtail involvement by pure investors, not users and producers of the commodities, like farmers, airlines and other industries.

The end result could be more stable prices at the pump.

U.S. Considers Curbs on Speculative Trading of Oil (New York Times)

Comments

Does "stable" inherently mean "permanently higher" as well?

It will not mean higher oil prices. It will mean real oil prices based on true demand instead of investor greed and speculation. Look at chart of historic oil prices and you will see a gradual rise similar to inflation, until it became a market traded commodity open to anyone with an online trading account. There was absolutly no reasonable excuse for the oil price gouging of last summer.

The answer to Billy4202's question is 'yes.' Curtailing involvement by speculators in commodities markets only serves to make those markets less liquid. So those "users and producers of the commodities, like farmers, airlines and other industries" may find it more difficult to find an appropriate counterparty should that happen.

History is replete with examples of governments literally bringing economies to ruin by trying to "do something" about speculators.

Please educate us and provide examples.

I hope we don't end up paying 90% taxes in gas, like in the European Union countries.

We are getting closer and closer to being a socialist country.

I knew a Rush ditto-head would have to come out of the woodwork, throw out the term "socialist" without knowing what it means, and then hide again, and that person is "C".

Regulation is what would've prevented the credit default swaps that were a major factor in this whole mess. Gov't regulation does not equal socialism.

Tom R.- please provide us with specific examples (with references) of how US gov't regulation of speculation has raised prices. If history is "replete with examples", then surely you can provide us with a few.

I"m going with Mike on this one and that's all I'm going to say.

Speculation in crude oil started in 1979 I believe.

Vik,

Hide? Well, what do you mean by hide?

Socialism, simply put, means the state/government pretty much controls how much and how many of everything is made. Meaning nearly no free market.
If we consistently say we are the number 1 free country because of our capitalism, please do explain why aren't we rated the free-est trading market?