Commodities Regulation Won't Stop Oil Speculation
Wednesday July 8, 2009
The CFTC regulates the U.S. Oil Exchange only. The London Oil Exchange is regulated by the UK Financial Services Authority. U.S. traders can trade U.S. oil futures on the London exchange. This will allow speculation and market manipulation by large traders to continue, regardless of Federal regulation. (Source: OilExchange.org)
How It Affects You
Oil prices rise in the summer, thanks to increased vacation driving. Everyone knows this, so commodities traders bid prices up even higher. This helped drive oil prices to $145 a barrel last July. This year, the recession is keeping oil prices relatively contained. Prices fell to $34 a barrel in February before rising to a high of $72 a barrel in June. As a result, gas prices have hovered between $1.70 - $2.75 a gallon. This is nowhere near the high of $4.16 a gallon reached last summer.Related Articles
- High Oil Prices Caused by Wall Street, Not OPEC
- How Oil Prices Are Determined
- Why Oil Prices Are High
(Photo Credit: Taxi/Getty Images)
Do you think increased regulations will help fix the economy?
Comments
The government is “now looking” at regulation? Oil markets are currently, and have been, regulated first by the Exchanges (SRO’s that are lightyears ahead of the government in terms of regulation) and also the CFTC. When referring to the large price swings over the last year, you really should make more note of the supply/demand fundamentals such as the international/comparative value of the dollar, shipping demand and costs on the baltic sea, changing refinement costs based on the type of crude being delivered for cracking/refinement, and international need for China based on the Olympics. These are only a few points, there are hundreds of other macroeconomic factors that alter the price of oil on a daily basis. This article is misleading.
Hi GW,
Last year, oil prices increased despite a drop in demand and a rise in supply. For details, see High Oil Prices Caused by Wall St, Not OPEC.
On the other hand, you were right to point out the article suggested there was no regulation. I changed it to read “increased regulation.”
Kimberly
The only way we can really see a feasible price for gas is if we start drilling offshore. This will also create many jobs which will boost the economy. I believe in MMS 5 year plan. http://tinyurl.com/mh5p36
Hi Jamal,
This would increase the supply, but would it really help with oil and gas prices if commodities traders are not regulated?
Kimberly
Kimberly,
To be honest, I am not sure, all I know is that simple economics of supply and demand, if supply outpaces demand, prices will be low!
Hi Jamal,
Oh, I wish we were still in those times where the simple rules of supply and demand were all we needed to understand. I’m afraid we, like Alice in Wonderland, are just finding that the factors that are affecting our economy are just getting “curiouser and curiouser.”
Kimberly