North West Florida Republican

I have been saying for some time that speculation and investment in the Oil trading market has driven prices. It is irritating to hear our Congressmen and Congresswomen deny this. Even after one corporation being investigated for successfully manipulating oil pricing.

A report issued today claims that this is indeed the case.

The work by Michael Masters, president of the Masters Capital Management hedge fund, blames investors who buy and hold an index of commodities for driving prices to records, and for their subsequent drop. It comes a day before the U.S. Commodity Futures Trading Commission is set to discuss its own study of energy trading with a congressional committee.

Masters testified three times before Congress this year, arguing that limits on traders would cut oil prices to $65 to $70 a barrel. He has been cited by lawmakers who introduced at least 20 measures to curb speculation. Congressional pressure on the CFTC to step up enforcement and restrict anonymous trades has pushed index traders out of their positions, Masters said. – Bloomberg

There are quite a few lobbyists who claim just the opposite.

“Just as weather forecasters have no effect on the weather, energy speculators have no effect on the price of oil,” said Scott Talbott, a lobbyist for the Financial Services Roundtable, which represents investors. “His fallacy is that he ignores the laws of supply and demand, which determine the price of oil.”

However, OPEC has been saying for months that there is ample supply and they don’t see a demand causing problems. That is why there were reluctant to increase production and they have in fact lowered production due to the flagging demand.

Prices of oil now are falling now, in part, because of the decrease in demand by consumers. And also in large part into the dumping of the options from these commodity funds.

There are very few things that I think the government needs to be involved. This happens to be one of them. The fleecing of America through manipulation of oil, a commodity that people just can’t live without right now, needs to be severely curtailed. It is adding a burden on the public and those least able to afford it.

Maybe between the Republicans and the Democrats we can actually get some resolution to this problem now that Senator Pelosi and Senator Reid have acknowledged there is an actual problem that needs to be resolved.

Filed under: National Politics