Oil crisis simple solution - outlaw margin trading of commodities - why not? As others have pointed out, it would be very easy to pop the commodity bubble and have $35 oil and $1.25 gas if margin trading of commodities was outlawed. What I don't understand is why this isn't being discussed by the government, regulators, and people that care about mankind as a solution to this sickening speculator induced bubble. All Washington has to do outlaw margin trading of commodities and this speculator induced nightmare will end instantly. It is pitiful to watch stupid Bush go and ask Saudi Arabia to increase production. This has nothing to do with Saudi Arabia. This is being caused by NYMEX, ICE, and the CFTC - all of which can be controlled by the US government. In the old days commodity prices were determined in the marketplaced between producer and consumer. Today commodity prices are determined in digital casinos between speculator and speculator. Gamblers shouldn't determine what ordinary people pay for gas and food. A fair marketplace consisting of consumer and producer and no one else should determine this. Outlawing margin trading of commodities is the fastest, easiest, only solution. It is time we let the president, congress, regulators and those responsible for this mess (NYMEX, ICE, CFTC) know that decisive action must be taken NOW!
Errrr what about the rest of the countries outside of the US. Oil is trading at these levels independently of the US market, if you outlaw margin all of the volume will leave the NYMEX and head overseas to rival exchanges in Dubai and UK with possibly a further increase in prices as a result. There are other countries in the world apart from the United States that trade consume and produce oil so the SEC CFTC can do anything they want it will not make one jot of difference to the price of oil Regards
Uh, what did Japan do when they were short squeezed over oil in 1942? sometime around December? uh, on which worship day again? uh, just as the flags were being raised and the band was warming up?
I think OPEC sits upon something like 80% of the world's petrol. OPEC production has remained almost the same for decades, world consumption has doubled, leaving other non OPEC countries to make up for the doubled consumption. Some country recently joined OPEC, yet OPEC has maintained the same amount of production effectively removing 2+ million barrels of oil being produced per day. The world has what these OPEC countries need, food. I would say limit food production or exports as they do oil production, but the United Arab Emirates for example has almost $1 trillion in cash reserves and they are buying up farm land in various countries.
What better way to hedge higher energy costs than the ability to buy crude futures? The money you would have made just today buying crude futures would pay for a year's worth of gas. You are a trader no? Raising margins to some ridiculous level will only shut out small traders and investors. Institutions and hedge funds will still have plenty of capital to trade the way they want, even with substantially higher margins. I am not one of these conspiracy theorist who believes that the 'evil speculator' is to blame whenever a market goes haywire. I would put much of the blame on the state of geopolitical tensions, administration's energy policy (lack of), falling dollar, etc. etc. Remember back in 2001 when Dick Cheney had a secret "Energy Task Force" meeting with to craft his "energy policy"? I'm sure Ken Lay is looking down now and saying 'wow, everything we asked for is coming true, good going Dick'. I say look there before you start blaming speculators. Raising margins to combat high oil prices is about as retarded as ethanol subsidies.