(Source:Heatingoil.com)
Senator Sharrod Brown of Ohio publicly directed the CFTC to hurry up and enact position limits on oil speculators.Senator Sharrod Brown (D-OH) held a press conference on Sunday, at which he declared his opposition to oil speculation, blamed it for climbing gasoline prices, and urged the Commodity Futures Trading Commission (CFTC) to take action against speculators. However, Brown’s only cursory acknowledgment that the CFTC is already deeply involved in formulating limits on speculation aimed at lowering fuel prices undermined the effectiveness of his initiative to get regulation on the books sooner rather than later.
The Cleveland Plain Dealer reported on Sunday that Brown held the press conference at a gas station in the Cleveland Heights neighborhood of Cleveland, and stood with the gas station’s owner and an unemployed constituent as he spoke about the damage high gas prices do to the American economy. Brown’s central message was that climbing oil and gas prices may benefit speculative investors, but hurt small businesses and consumers alike, as the Plain Dealer paraphrased:“If it hits $4, a few people will make a lot of money and everybody else will pay the price,” said Brown, a Democrat from Avon. That includes workers, parents, truckers and local businesses who could suffer, he said.
At the press conference, Brown also released a letter he wrote to CFTC Chairman Gary Gensler on Thursday, in which he instructed the commission to “complete its remaining tasks [in curbing oil speculation] expeditiously.” In the letter, Brown also expressed concern that the CFTC would not meet its January 21 deadline for creating position limits as set by the Dodd-Frank financial reform law. The CFTC did in fact let Friday’s deadline pass without implementing limits, which came as no surprise, considering the commission declared in October that it had the legal right to ignore the deadline. In support of his belief expressed in the letter that oil prices are being driven up by speculation, Brown quoted a 2009 study by the Peterson Institute for International Economics:
while market fundamentals obviously played a role in the general run-up in the oil prices from 2003 on, it is fair to conclude by looking at a variety of indicators that speculation drove an oil price bubble in the first half of 2008.
All in all, Senator Brown’s call for regulations to reduce speculation and lower crude, gasoline, and heating oil prices could only help raise the visibility of the CFTC’s turbulent and ongoing mission to meet that goal by setting position limits. For this reason, the heating oil industry and other retailers of petroleum fuels likely nodded with approval at Brown’s comments and the content of his letter to chairman Gensler.
But Brown offered little in terms of constructive comments or actions that might actually help position limits take effect sooner. As a politician, Senator Brown was simply doing what politicians do: announcing to the world that he has heard the grievances of his constituents and getting his name in the news. Though the extra attention drawn to the issue of inflated gasoline and heating oil prices couldn’t hurt, it is highly doubtful that Brown’s press conference and letter will have any effect on regulations on oil speculation already under development in the CFTC.
Senator Sharrod Brown of Ohio publicly directed the CFTC to hurry up and enact position limits on oil speculators.Senator Sharrod Brown (D-OH) held a press conference on Sunday, at which he declared his opposition to oil speculation, blamed it for climbing gasoline prices, and urged the Commodity Futures Trading Commission (CFTC) to take action against speculators. However, Brown’s only cursory acknowledgment that the CFTC is already deeply involved in formulating limits on speculation aimed at lowering fuel prices undermined the effectiveness of his initiative to get regulation on the books sooner rather than later.
The Cleveland Plain Dealer reported on Sunday that Brown held the press conference at a gas station in the Cleveland Heights neighborhood of Cleveland, and stood with the gas station’s owner and an unemployed constituent as he spoke about the damage high gas prices do to the American economy. Brown’s central message was that climbing oil and gas prices may benefit speculative investors, but hurt small businesses and consumers alike, as the Plain Dealer paraphrased:“If it hits $4, a few people will make a lot of money and everybody else will pay the price,” said Brown, a Democrat from Avon. That includes workers, parents, truckers and local businesses who could suffer, he said.
At the press conference, Brown also released a letter he wrote to CFTC Chairman Gary Gensler on Thursday, in which he instructed the commission to “complete its remaining tasks [in curbing oil speculation] expeditiously.” In the letter, Brown also expressed concern that the CFTC would not meet its January 21 deadline for creating position limits as set by the Dodd-Frank financial reform law. The CFTC did in fact let Friday’s deadline pass without implementing limits, which came as no surprise, considering the commission declared in October that it had the legal right to ignore the deadline. In support of his belief expressed in the letter that oil prices are being driven up by speculation, Brown quoted a 2009 study by the Peterson Institute for International Economics:
while market fundamentals obviously played a role in the general run-up in the oil prices from 2003 on, it is fair to conclude by looking at a variety of indicators that speculation drove an oil price bubble in the first half of 2008.
All in all, Senator Brown’s call for regulations to reduce speculation and lower crude, gasoline, and heating oil prices could only help raise the visibility of the CFTC’s turbulent and ongoing mission to meet that goal by setting position limits. For this reason, the heating oil industry and other retailers of petroleum fuels likely nodded with approval at Brown’s comments and the content of his letter to chairman Gensler.
But Brown offered little in terms of constructive comments or actions that might actually help position limits take effect sooner. As a politician, Senator Brown was simply doing what politicians do: announcing to the world that he has heard the grievances of his constituents and getting his name in the news. Though the extra attention drawn to the issue of inflated gasoline and heating oil prices couldn’t hurt, it is highly doubtful that Brown’s press conference and letter will have any effect on regulations on oil speculation already under development in the CFTC.
