Monday, March 05, 2012

Clueless Democrats Rail Against Oil "Speculation"

I swear sometimes the Dems are so clueless when it comes to things like commodity prices that you wonder how they got their jobs in the first place.

"As the cost for American people to fill their gas tanks continues to skyrocket, the CFTC continues to drag its feet on imposing strict speculation limits to eliminate, prevent, or diminish excessive oil speculation," the members of Congress told the commissioners in a letter. "We urge you to take immediate action to impose strong and meaningful position limits, and to utilize all authorities available to you to make sure that the price of oil and gasoline reflects the fundamentals of supply and demand." 

Um, speculation does not drive up oil prices nearly as much as the threat of an Israel/Iran War would. I swear the Dems see shady bankers and Wall Street types hiding under every rock. The funny part is that these changes only effect US traders because of the hated Dodd-Frank Law. Oil futures are a global market so traders in other countries might not feel these sanctions at all while US firms have to deal with them.

Also is hedging by an oil major considered speculation? I mean they are betting against their own production of oil in order to limit their downside. So they are speculating that the price does not drop below a certain amount so they don't start to lose money. Would a limit on the total contracts they own affect this hedging? Who knows? The Dems certainly are clueless on this issue.

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