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Opinion Leaders Speak Out 3/17/2011 - Representative Barney Frank (D-MA), United States House of Representatives "There is no question that speculation is playing a role in the rise in gas prices." New York Times 1/20/2011 - Senator Sherrod Brown (D-OH), United States Senate "They will bet on prices going up, encouraging other to bet on prices and they pocket a lot of money." NBC4i.com
1/14/2011 - David Berg, vice president and general counsel, Air Transport Association "The extraordinary price fluctuations that harmed consumers, industry and the economy in recent years will not be prevented by the proposed limits, and with predictions that prices will once again exceed $100 a barrel, the CFTC must do more to address this problem by delivering on the intent of Congress as clearly outlined by Dodd-Frank. The market easily can function efficiently and effectively with more stringent limits." ATA News Release 1/14/2011 - David Berg, vice president and general counsel, Air Transport Association "Excessive speculation, unrelated to the fundamentals of supply and demand, creates volatility in prices that simply cannot be effectively managed by the airlines or, for that matter, any other industry where fuel is a key cost item, and it damages the economy." ATA News Release
12/15/2010 - William F. Galvin, chief financial regulator, State of Massachusetts "If the Commission fails to act in a timely way or fails to adopt strong position limits, markets and consumers will be vulnerable to excessive commodity prices and volatility arising from speculative trading activity." Bloomberg
http://www.stopoilspeculationnow.com/pages/MoreQuotes.aspx
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Nelson, other senators urge curb on oil speculators By William E. Gibson, Washington Burea Orlando Sentinel March 17, 2011
WASHINGTON — Florida Senator Bill Nelson and a dozen of his colleagues urged federal officials on Thursday to use new regulations to curb speculators from driving up gas prices.
“Speculators are seizing on recent political turmoil in North Africa and the Middle East to drive energy prices to unwarranted levels,” the senators wrote to Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission.
The senators cite evidence that oil trades have jumped 35 percent since civil unrest began late January in North Africa and then the Middle East. During that period, U.S. gas prices soared by almost 40 percent.
Speculators can buy $100 worth of oil futures with only $6 down, Nelson said. The Commission has the authority to call for higher margin requirements. Other commodities traded in the same exchanges often require 50 percent down, he said.
http://blogs.orlandosentinel.com/news_politics/2011/03/nelson-other-senators-urge-curb-on-oil-speculators.html
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A text of the letter is below:
March 16, 2011
The Honorable Gary Gensler Chairman U.S. Commodity Futures Trading Commission
Dear Chairman Gensler,
There is strong evidence the recent surge in gas prices has little to do with the fundamental supply and demand for oil. Government data confirm that oil speculators are driving the price increase. We urge you to restore integrity to our energy markets by exercising the CFTC’s authority to require higher margin levels for speculative oil futures contracts.
Speculators are seizing on recent political turmoil in North Africa and the Middle East to drive energy prices to unwarranted levels. The Commitment of Traders Report reveals that speculators have flooded into the market in recent weeks. Since protests began in Egypt on January 25, 2011, money managers have increased their long positions in NYMEX West Texas Intermediate crude oil futures contracts by more than 35 percent, or the equivalent of 75 million barrels of oil. Oil speculators have increased long positions on the Intercontinental Exchange by nearly 50 percent. At the same time, actual true hedgers have reduced their long positions in the oil futures markets.
The loser in this game of oil speculation is the American consumer. Rising oil futures translate into higher gas prices, and that means Americans have less money in their pockets to pay for basic needs.
In the Dodd-Frank Wall Street Reform and Consumer Protection Act, we empowered your Commission with a number of new tools to rein in excessive speculation and prevent market failures. In addition to mandating speculative position limits, we removed the broad statutory restriction that prohibited the CFTC from imposing higher margin requirements. Section 736 authorizes the CFTC to require higher margin requirements in order to protect the financial integrity of the futures trading markets. Now is the time to exercise that authority. New margin requirements could take effect as soon as July, but the CFTC must begin the rulemaking process now. Higher margin levels would reduce incentives for excessive speculation by requiring investors to back their bets with real capital.
For the same reason we don’t let pharmaceutical companies approve their own drugs, we shouldn’t let futures exchanges self-regulate by setting their own margin requirements. This hands-off, self-regulatory approach has led to a fundamentally inequitable system in which ordinary investors are required to post 50 percent margin to buy a stock, but Wall Street traders post only six percent to purchase a risky and volatile futures contract.
We urge you to act quickly to raise the margin requirements imposed on speculative oil contracts. The margin increase should only apply to speculators, not true hedgers. This is consistent with current exchange policies that apply different margin requirements for investors and bona fide hedgers. With your leadership, we can discourage damaging and excessive speculation in the oil markets and bring down gas prices.
Sincerely,
Sen. Sherrod Brown ( D-OH ) Sen. Maria Cantwell ( D-WA )
Sen. Barbara Boxer ( D-CA ) Sen. Al Franken ( D-MN )
Sen. Jeff Merkley ( D-OR ) Sen. Patty Murray ( D-WA )
Sen. Robert Menendez ( D-NJ ) Sen. Mark Begich ( D-AK )
Sen. Rockefeller IV ( D-WV ) Sen. Carl Levin ( D-MI )
Sen. Barbara Mikulski ( D-MD ) Sen. Bill Nelson ( D-FL )
Sen. Bernard Sanders ( I-VT )
http://blogs.orlandosentinel.com/news_politics/2011/03/nelson-other-senators-urge-curb-on-oil-speculators.html
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