That's what federal regulators are saying with Tuesday's announcement that they will consider curtailing "excessive speculation" in energy markets. The move comes in response to last year's spike in oil prices, which soared to a record $145 a barrel a year ago next week and pushed gasoline prices above $4 at the pump in many parts of the country. Since the start of this year, crude prices have jumped 42 percent, even though the recession has crimped demand and storage tanks are full.
Speculators must be to blame.
No one seems upset about last fall, though, when those same speculators helped drive down prices by more than $111 a barrel in the last five months of the year.
Another good piece at Rigzone.
Posted by Kate at July 10, 2009 1:25 PMThere isn't any point in investing now if the investment isn't going to grow, is there?
I thought the need for liquidity was the reason for the stimulus spending.
Posted by: Oz at July 10, 2009 1:41 PMGoldman Sachs will make $26.4 billion trading in markets this year. Someone else is on the other side of each of these transactions. This is very expensive "liquidity". The markets are technically speaking, "RIGGED".
Posted by: imapopulistnow at July 10, 2009 1:48 PMDonald Trump said the speculators are not the real problem. The real problem is OPEC. Us over a barrel, so to speak.
Posted by: Sounder at July 10, 2009 1:50 PMIt's never government's fault. That's consistent.
Posted by: Aaron at July 10, 2009 1:55 PMSo the EU and US decides to "reign in speculators" with "regulation".
What happens? The futures market moves to Japan. Problem solved.
Posted by: allan at July 10, 2009 2:18 PMBureaucracies and government - once created - exist to expand and gain larger influence across ever widening mandates.
Capitalism is speculation ... you "speculate" on something, be it a business, stock, or even lemonade stand, and you put up money and or hard work. Sometimes you win; sometimes you lose.
Hell, even getting an "education" is speculative.
If you remove speculation, then you also remove upward mobility.
Posted by: Cjunk at July 10, 2009 2:32 PMWouldn't it be easier just to smash Goldman into at least 10 pieces?
Posted by: Jason at July 10, 2009 2:32 PMJason: It's been seriously considered. But, Goldman is likely the most influential firm with both the GOP and DNC.
Posted by: Cjunk at July 10, 2009 2:44 PMCJunk,
Add Canada. Mark Carnie is a GS alum.
GS is the stuff conspiracy theories are made of...
Posted by: Jason at July 10, 2009 3:07 PMIn true Capt. Renaud fashion, Jim Cramer is shocked, shocked to find that oil markets can be manipulated:
http://www.cnbc.com/id/15840232?video=1175810702&play=1
Posted by: KevinB at July 10, 2009 3:35 PMSpeculators act as a damper to market activity not a exaggerator. When speculation caused oil prices to rise, it was because demand had outstripped production by a significant amount, and an oil shortage looked inevitable. Now if we had experienced a real shortage, as in not enough fuel to go around, how expensive would oil have become? Speculators knowing the value of oil during a shortage quickly drove the price by buying futures. This did two things, made it economically profitable to operate higher cost wells. And changed consumer habits to limit oil use. All of which over the course of about 4 months reversed the trend and supply again started surpassing demand. The important thing to remember was that it took months for those changes to take hold. If no speculation occurred then no change in market behavior would have occurred and then we would actually go into a shortage, then we would have spent months in shortage, and while we were there would think $4 a gallon was cheap. Oil shortage averted, crisis averted, thank you speculators.
Posted by: Michael C Keehn at July 10, 2009 4:04 PMPossibly commodities are going up because, due to all that money Obama just printed, the Greenback ain't worth what it used to be?
Just sayin'.
Posted by: The Phantom at July 10, 2009 4:06 PMThe market has two hands: the invisible one and that nasty backhand that slaps down anything you do to try to remove the invisible hand. Oil $200 by end of 2010, speculators or not. Consumers of energy get burned because there won't be any a-hole speculators taking the other end of the energy co.s attempts to minimize market risk.
Posted by: eljay at July 10, 2009 4:12 PMThey might have some luck controlling that in US, but I doubt it.
I used to work in an office which had a commodity division. You would be amazed (or not) at the diversity of clientèle. The majority of their business was with clients outside of the continental N.A.
Oil prices too high?
A. Take a short position and increase production.
B. Take a long position and decrease production.
But always, always, be positioned prior to doing either A or B.
Not only did they make mega-millions on futures trading, they dictated the trend. The price of Oil was just the mechanism.
The odd time, they were caught off guard by 'outside forces' so to speak. It was actually fun to hear the caterwalling from guys that lost millions and the clients they had to answer to.
/so glad I have been out of that for a good number of years.
I suppose what I'm getting at is although Obama 'Neville Chamberlain' Hussein Barack may want to control the spec market, good luck with that. He may have muscle in the US but the declining dollar and the power of other countries, I feel, will soon start dictating how the commodities and oil & gas markets perform.
Posted by: Jim in Calgary at July 10, 2009 4:36 PMOops: meant to say Barack 'Neville Chamberlain' Obama.
pardone
Posted by: Jim in Calgary at July 10, 2009 4:38 PM"The market has two hands: the invisible one and that nasty backhand that slaps down anything you do to try to remove the invisible hand."
Great line.
I agree with the general feeling on this thread. O'Reilly spoke to this yesterday once again demonstrating his "not conservative" views. Bill and most others on both sides of the political spectrum are drinking the Kool-Aide wrt this one.
If O'Reilly was a conservative, how could he possibly think the government can help?
A conservative once said something about "The scariest words in the English language..."
A value blogger named Todd Sullivan pointed to a certain hypocrisy in the 'speculator'-slagging spree.
I left a choice comment there. You can do the same if you like.
Posted by: Daniel M. Ryan at July 10, 2009 4:46 PMJust leave it to this American version of turdeau to screw things up for good, this bozo is about as dumb as they come. His whole administration are a bunch of financial illiterates. I don’t think there is one of them that understand the roll the speculators, be they longs or shorts, play in the free market system. If something’s not working properly, fix it, you don’t destroy your whole car if you have a flat tire. These idiots would tear apart the only thing that works and has worked for centuries for their idiotic dreams of financial nirvana.
Hello China, Hello India, Hello Brazil. Hello anyone that is 180 degrees opposite to this reality hick.
This prick may well accomplish what the USSR couldn’t.
Welcome to the United Socialist States of America the USSA.
Posted by: Western Canadian at July 10, 2009 4:48 PMPhantom:
Except commodity prices in general, and oil in particular, are not going up. The Goldman Sachs Commodity Index has put in a huge head and shoulders top, and is down to around 400 from a peak of 480 in early June.
Deflation ain't pretty.
Posted by: KevinB at July 10, 2009 5:12 PMwe all speculate when we decide to get out of bed in the morning. bloody scary i say.
Posted by: old white guy at July 10, 2009 5:18 PMyou can't have a population increase and an increase in the money supply and not expect prices to go up and up and up.
Posted by: old white guy at July 10, 2009 5:20 PMIf the US kills the free market in the US, it will move somewhere else. "Speculation" is individuals and corporate entities attempting to maximize their wealth. This is a totally natural phenomenum; even for a peasant subsistance farmer.
As I understood it, last year there was a lot of money looking for safe havens - the oil commodity seamed a good bet. Yes, speculation, but completely natural and not evil.
Now, how about government policies that force up the price of food? These are not natural, and totally wrong and bad for poor people. Yet, it is the left that espouses such policies!
Posted by: RW at July 10, 2009 9:19 PMRobert Rubin and Henry Paulson were the Treasury secs. For the last 2 Presidents. Both these men headed a firm called Goldman Sachs. Goldman and their employees were the single largest combined contributor to Obama.
Not just Oil but all the markets have not been acting right of late. Well last week a software program was stolen from Goldman.
What this program does is essentially read the market looking for very obvious trades or execute a single trade to take advantage rebates offered by the exchanges for providing liquidity. This is called Blackbox trading or if you prefer High Frequency trading, or program trading.
Goldmans computers are right next to the exchanges computers so execution, measured in milliseconds, just doesn't get any faster.
Now Goldman doesn't just have Treasury secs. but former Goldman employees have or had key positions in many of the regulatory bodies that oversee various and sundry markets. eg. CFTC
Anyways after the theft the markets began to return to normal. Heh.
Here is a link explaining this far more cogently than I can.
http://www.scribd.com/doc/17032728/Toxic-Trading-Saluzzi
p://zerohedge.blogspot.com/2009_06_28_archive.html
That should be:
http://zerohedge.blogspot.com/2009_06_28_archive.html
Posted by: Jeff Cosford at July 11, 2009 5:20 AM[quote]In true Capt. Renaud fashion, Jim Cramer is shocked, shocked to find that oil markets can be manipulated:[/quote]Kevinb,
He would be even more shocked if his shoes where nailed to the floor.... Maybe he has a contract issue with GE and doesn't give a F***…. I loved his 401K (IOU) justification
ALL TRADING MUST BE REGULATED or the gangsters run amuck... Margins (credit) needs to be adjusted everywhere... paper money trails are slippery…
Call it Zombie, Call it Speculation, Call it OPEC .. Just stop the "Long Term" Corrupt manipulation...Normal Speculaton looks after the short term trends...
Jim,
Markets can't move off-shore unless GOLD is the currency...JMHO
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