The Price of Gas will soon be $1.50, right?
This will teach them, right?
H.R. 6377 directs CFTC to use all its authority, including its emergency powers, immediately to curb the role of excessive speculation in the energy and swaps futures markets and take other corrective actions as necessary to eliminate any market disturbance that prevents energy markets from accurately reflecting the forces of supply and demand.
And what long-term supply (h/t Mark Thoma) is that?
As has been noted elsewhere, regulation at the CFTC isn’t in itself a bad idea. Indeed, it’s long overdue. But I’ll go back to Krugman and the FT:
The case for such a policy is based on a flawed concept of how these markets work. Those pushing for restrictions argue that an artificially high demand for essential commodities such as oil and corn has been created by the institutions’ purchase of long positions in futures contracts….
Now, if it were true that pension funds, insurance companies, evil hedge fund managers etc, were all buying large quantities of physical products such as silos of grain and storage tanks of oil, then the peasants with the torches, and their leaders, would have a point. But the investors aren’t buying physical product. [Nonsense about Lieberman being a Democrat omitted; italics mine]
So, if this bill passes the Senate and is ultimately enacted, the CFTC either will prevent some people from buying futures (by some miracle, unless they’re going to do this only for crude contracts, which would mean Lieberman is even stupider than I think he is) or, more likely, change some requirements in the booking, reporting, and buying of such contracts which will make it more difficult for outright speculators.
Now, don’t get me wrong: I fully expect to be paying $1.50 for gasoline in a couple of months: but that will be C$1.50/litre. The odds of those of you staying in the States being able to pay that per gallon—well, I wouldn’t take them. Even if I were “speculating.”