So let me get this straight...Congress wants to limit American traders/speculators, but they don't say who the prices would be set by then. Prices will still be set by our fellow Middle Easterns. Why should we try to micro-manage the price we pay for a luxury that we don't have? I don't go to the supermarket to buy a loaf of bread that is listed at $2.50, and I say I'll only pay $1.75 for it. They obviously won't give it to me. If $80 oil comes, all OPEC has to do is cut production and we would feel the rise in prices at the pump no matter what. This is just bullshit political crap that both the Dems and Republicans are using to calm down voters ahead of the election. I frankly hate it and say they should let free markets be free markets. Why impose implicit regulations against something that has worked for years. We need market makers/speculators/traders like you and me to make a market for something and have a set price. Remember there is a buyer for every seller and that longs generally are more capitalized than shorts (long-commodity funds are not leveraged), so this restricting on margin or trading limits would just drive prices up even more. Here's an idea: (not that I like raising taxes), Raise the gasoline tax, develop alternative energy, stop worrying about getting foreign oil for a "cheaper" price and worry about getting energy from our homeland where in a sense it's free and we can become the world power once again. Americans have to realize that we don't have a right to foreign oil (it is a product that is provided to us at a cost) and that they have a choice in their elected leaders and choosing how we go about with our energy crisis.
longs generally are more capitalized than shorts (long-commodity funds are not leveraged), so this restricting on margin or trading limits would just drive prices up even more. Good point, but they buy indexed products and the seller e.g GS uses leverage? (? because I am not completely sure, comments from those who know welcome)
I'm not exactly sure; but I am pretty sure the big GSCI (Goldman Sachs Commodity Index) and the funds that base themselves on it are not leveraged, so they have the cash/investment on hand for the full value of the contracts. Edit: From the Goldman Sachs website: The S&P GSCI⢠is a composite index of commodity sector returns representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities. The returns are calculated on a fully collateralized basis with full reinvestment. The combination of these attributes provides investors with a representative and realistic picture of realizable returns attainable in the commodities markets.
the futures market isn't as big as you think. even without the futures market, oil will still be produced and consumed. traded the old fashion way.
Hey, give Larry Craig and a couple of other Republican senators some credit...they voted against the oil speculation bill and it is tabled for now. He has managed to make himself useful between bathroom visits. I don't agree with the reasons that they voted against it but I'm all for grid-lock in Washington D.C. They less they get "done" the better. Looks like this bill is dead for now.