U.S. Moves to Shed Light on "Dark Markets"

CBS News Investigates: Government May Set Limits on Oil Speculators and Improve Transparency

(CBS)  It was a year ago this week that crude oil prices rocketed to a record $147 a barrel, sparking widespread outrage that speculators - like banks, hedge funds and investment giants - were behind the rise.

Ever since, the price of crude has been on a wild ride plunging as low as $34 a barrel in December before bouncing back to about $60 today.

This has fueled new concerns that - in the midst of economic turmoil - oil speculators are at it again, pumping an estimated $200 billion into the oil futures market in just the last year, reports CBS News chief investigative correspondent Armen Keteyian.

"I still think we have a lot of investment dollars flowing into dark markets," said Sen. Marcia Cantwell, D-Wash. "That is, oil being traded, energy futures being traded, on markets that aren't regulated."

In response, the Commodities Futures Trading Commission, which regulates oil and other commodities in the U.S., is dropping its historic hands-off approach. It is now considering tougher regulations that would make it harder for speculators to amass huge positions and make money timing the market.

"It's not our job to set prices in government but it is our job to make sure there's no fraud abuse or manipulation," said CFTC Commissioner Bart Chilton.

Under new leadership the CFTC is now considering for the first time setting limits on speculators the amount of oil they can hold and how long they can hold it.

It would also improve transparency, strengthening reporting rules to shed more light on who is speculating and with how much, especially in so-called "dark markets" long outside U.S. regulation.

It's not exactly welcome news among oil traders.

"I think it's a witch hunt," said energy markets analyst Phil Flynn. "I don't think there's any credible evidence that speculators are the sole cause of oil prices going up."

The CTFC will hold public hearings this month and next. As one insider told Keteyian: "Something is going to happen. We can't go through another summer like last summer."

[stopoilspec]

Three objectives can be realized from rationing gasoline and controlling the price of oil. First, our oil reserves will be preserved toward future needs thus reducing the use of foreign oil. Second, private and public transportation needs will be served with reasonable use of gasoline or promoted innovative alternative fuel or energy. Third and most importantly, vehicles will be required to be engineered to be more fuel-efficient.
For example (the numbers are negotiable), place an allotment on private vehicles allowing enough gasoline to travel say 1000 miles per month at the rate of 20 MPG the first year and then raise the MPG to say 22 the second year. Ratchet it up 2 MPG each year until we meet a standard for a reasonable economic reduction of the foreign oil being used.. If more gasoline is needed let those who use more than their ration pay a dollar more per gallon as an excise tax. This would promote auto engineering toward fuel efficiency and far less carbon in the atmosphere. A similar plan for trucks, buses and other fuel users can be put into law and regulation. For example, require all new trucks, buses and other heavy fuel users to be retrofitted for use of CNG, (compressed natural gas).

We need a solution to our economic problem. Gasoline was rationed during WW II. The people want leadership and discipline to change the economy. This may seem to be a negative approach, but necessary to overcome the love affair people have with the convenience of the automobile. When the market price of gasoline goes down the US auto companies promote big cars, suv's and trucks instead of fuel-efficient vehicles.

Let's improve transparency on White House visitors while we're at it.

[rafterman1]

Set "limits" on oil speculators? How about getting rid of them entirely. The same with lobbyists. Setting "limits" on these vermin is like saying we are only going to cut out SOME of the cancer. The rest left over is still cancer.

[flsunjnky]

It's about time we struck back! It was obvious that speculators were the ones that drove gas prices to ridiculous levels last year. I'm glad something is going to be done. For sure NOTHING would have been done under Republican leadership (if ya can call it that). Big business, oil, who cares about the average American?

[eclecticman1]

AGAIN THE OBAMA ADMINISTRATION IS DOING SOMETHING THAT SHOULD HAVE DONE BEFORE.

[didserve]

careful congress you will find some of your members at the bottom of this!

[fleabag75]

I've been around for a long time now and it makes me cry when I read how ignorant some people are. School levies fail left and right and then I read some of these comments and ask, "Why God?,, Why do you allow so many ignorant people to suffer without an education?"

[ahrats]

Its simple take oil off the comodity market, phase it out of course. It a natural resource not a comodity. Oil has so many uses and effects so many products that a little change in it value can cause problems. The only other recourse is shoot all oil speculators.

[tautomer]

Since NYMEX has a position limit of 20,000 net contracts (20MM bbl) and ICE has established position limits ti seems silly for the CFTC to establish further limits.
If they do, and the limits are onerous, trading will simply move to venues outside the jurisdiction fo the CFTC such as the Singapore Exchancge or the Dubai Exchange.
Once that happens the CFTC will have no power whatsoever to over the market.

At present the CFTC can adjust margin requirements if it believes the market is being manipulated. Once that power is gone the CFTC may as well close shop.

Markets are competitive just like anything else. It the CFTC renders American trading markets unattractive it will cost our businesses dearly.

[kcits]

Its amazing, since the look into the way the price of oil is manipulated, and the price of gas drops 35 cents in a week. Like how each year , on the day summer comes, the price skyrockets. Naaaaaaaaaaaaaaaaa there isnt anything going on that isnt on the up and up.

[kcits]

Its amazing, since the look into the way the price of oil is manipulated, and the price of gas drops 35 cents in a week. Like how each year , on the day summer comes, the price skyrockets. Naaaaaaaaaaaaaaaaa there isnt anything going on that isnt on the up and up.

[payasyougo]

"U.S. Moves to Shed Light on "Dark Markets"
CBS News Investigates: Government May Set Limits on Oil Speculators and Improve Transparency"
----
Now there is absolutely no proof that the contributions (pronounced "kik-baks") that Chriss Dodd gets from the oil lobby has anything to do with the high oil prices we are seeing. It just has to be those evil Republicans and their rich Republican friends. Rich Republican friends unlike Warren Buffet (Obama's good buddy), Marc Rich (Clinton's good buddy) and Everybody's favorite speculator George Soros. And exactly what does is the tie between speculation and political generosity?

[cyberus-2009]

If they were to require that they take delivery of the contract before re-selling the commodity IMHO that would take the wind out of the speculators sails

[tautomer]

It would also take liquidity out of the market! LOL

[whitemale08]

Most of you partisan idiots still scapegoat Hugo Chavez or Achmedinijad like your master Druggie Limbuagh and junkyard dog Sean Hannity tells you to do.

Instead of blaming Goldman Sucks and JP Morgan, which pays for the advirtisement that funds Druggie Limbaughs mulit-million dollar salary, the bankers get the American sucker to blame Hugo Chavez and bail out their worthless derivatives and credit-default swaps so they can keep looting you.

And if Obama believes that silly windmills and solar panels are going to bring down oil prices you're suckers again.

THE AMERICAN SUCKER FOR GOLDMAN SUCKS AND JP MORGAN...YOU GOTTAL LOVE 'EM!

[ubrew12]

Well I totally agree on Goldman Sucks and Morgan, but the engineer in me understands that windmills and solar panels ARE going to bring oil prices down (but I hope carbon taxes will keep them inflated). We can't afford oil anymore for a multitude of reasons, but we CAN afford (barely) to move past oil into numerous alternative energy schemes (with some nuclear backup) to break the back of those who continually trade AGAINST us (Sachs and JP Morgan). And I think the best solution is to tax the sh*t out of those Wall Street barons and spend in on alternative energy schemes. Face it, no one owns more of Sachs and Morgan than the oil-rich Texans and Saudis, who don't give a DAM** about the rest of America, or the world.

[erasmus111]

by shazmispanks2 July 8, 2009 6:43 PM PDT
....Thanks to the devouted canadians for opening up your eyes ....


Hahahaha, are you patting yourself on the back?

[artorus]

Where's your energy plan Obama? Even nuclear is looking pretty good at this point.

[pensacola8-2009]

When I heard through another source last year that the Bush Administrations finding about oil futures going so high were actually from ailing banks trying to find ways to offset their losses from the forclosures, I was waiting for Fed Chairman Bernarke to report it - to no avail....I was waiting for FOX News to report it - to no avail....CNN, CBS, MSN, - to no avail...

Then we heard about the passing of the bailout..

It is about a year late...but finally a news news media released something that was known a year ago...Seems like more Bush Adminstration Propoganda and News control.

I am so glad Barack Obama won over McCain and know we are moving back in the right direction.

Only one foreign news agency let out a blurb about the US banks running the Oil Futures up to offset their losses in the mortgage meltdown...a year ago.

People, we were being deprived and starved of facts under Bush / Cheney in a serious way.

[billpl-2009]

"I don't think there's any credible evidence that speculators are the sole cause of oil prices going up."

B.S.

fool us once, shame on you
fool us twice, shame on Obama

[erasmus111]

by darthcheney345 July 8, 2009 4:22 PM PDT

Obama is the worst president in 100 years.


This is exactly what gave you away.

[speakinup22]

I don't know erasmus111. More and more people are starting to think Obama is messing up. His poll numbers are slipping fast, according to the Wall Street Journal's article quoting Gallup and rassmussen

http://online.wsj.com/article/SB123690358175013837.html


Slip sliddin away - yup - he's got one foot on the ole banana piel suh!

[ubrew12]

They should slip. Obama is just Bush-lite: his policies mirror Bush's in almost every particular. Take healthcare: HE is the defender of the status quo, despite the fact that REAL leftists promote single-payer, for the simple fact that it's worked so VERY well for every one of our capitalist trading partners for over 30 years! Take war: Obama really hasn't done that much differently from Bush. Take the economy: Bush sought to protect Goldman Sachs and the other WallStreet barons from the catastrophe they created, and has Obama done ANYTHING other than to complete what Bush created there?

And Obama pays lip-service to Global Warming. Its a serious problem that those of us on the left TAKE seriously, but the solution Obama is promoting is little more than a give-away to the Coal industry and other polluters.

[vielmann]

by speakinup22 July 8, 2009 7:44 PM PDT
I don't know erasmus111. More and more people are starting to think Obama is messing up. His poll numbers are slipping fast, according to the Wall Street Journal's article quoting Gallup and rassmussen
*************
You wish. Keep listening to Limbooger.

[ubrew12]

"In response, the Commodities Futures Trading Commission, which regulates oil and other commodities in the U.S., is dropping its historic hands-off approach. It is now considering tougher regulations."

Its very brave of the CFTC to drop their hands-off approach to regulation. Now they will have to do some work. (Honestly, what the fv*k are they there for?)