WARNING: Senate Democrats look to end U.S. trading
Posted: Tue May 13, 2008 2:38 pm
Democrats: Close speculation loophole
Senate Democrats look to end U.S. electronic oil trading in foreign exchanges to reduce the speculative inflation of oil prices.
By David Goldman, CNNMoney.com staff writer
Last Updated: May 8, 2008: 12:00 PM EDT
NEW YORK (CNNMoney.com) -- Democratic Senators are working to combat rising oil and fuel prices by attacking what many Americans see as the heart of the problem: speculative trading.
Many politicians and energy industry analysts blame oil speculators for cashing in on the fuel cost crisis and, in the process, boosting the price of oil. Hedge funds, trusts, and independent investors have also poured funds into crude oil as a hedge against the weakened dollar.
"A major contributor [to high oil prices] is the rise in speculation," said Sen. Carl Levin, D-Mich, who estimated that speculation has added about $35 to a barrel of oil. "This is not a supply and demand issue."
Levin said the solution can be found in closing the loopholes that allow electronic traders to buy oil outside of the United States. Levin noted that the "Enron loophole" will be ended if President Bush signs legislation that Congress passed as part of the proposed Farm Bill.
The "Enron loophole" was codified in the Commodity Futures Modernization Act of 2000, allowing oil futures to be traded electronically in unregulated markets outside of the jurisdiction of the Commodities Futures Trading Commission.
But Levin also said he is introducing a bill, calling for an end to all electronic loopholes, including the buying of oil electronically in regulated markets like the commodities exchange in London.
"[U.S.] computer terminals will be governed by U.S. regulation, because the computer terminal is located in the United States," Levin noted.
By making global speculative trading more difficult for investors, Levin and other Senate Democrats believe the artificial inflation of the price of oil will eventually fizzle.
full story:
http://money.cnn.com/2008/05/08/news/ec ... 2008050812
Senate Democrats look to end U.S. electronic oil trading in foreign exchanges to reduce the speculative inflation of oil prices.
By David Goldman, CNNMoney.com staff writer
Last Updated: May 8, 2008: 12:00 PM EDT
NEW YORK (CNNMoney.com) -- Democratic Senators are working to combat rising oil and fuel prices by attacking what many Americans see as the heart of the problem: speculative trading.
Many politicians and energy industry analysts blame oil speculators for cashing in on the fuel cost crisis and, in the process, boosting the price of oil. Hedge funds, trusts, and independent investors have also poured funds into crude oil as a hedge against the weakened dollar.
"A major contributor [to high oil prices] is the rise in speculation," said Sen. Carl Levin, D-Mich, who estimated that speculation has added about $35 to a barrel of oil. "This is not a supply and demand issue."
Levin said the solution can be found in closing the loopholes that allow electronic traders to buy oil outside of the United States. Levin noted that the "Enron loophole" will be ended if President Bush signs legislation that Congress passed as part of the proposed Farm Bill.
The "Enron loophole" was codified in the Commodity Futures Modernization Act of 2000, allowing oil futures to be traded electronically in unregulated markets outside of the jurisdiction of the Commodities Futures Trading Commission.
But Levin also said he is introducing a bill, calling for an end to all electronic loopholes, including the buying of oil electronically in regulated markets like the commodities exchange in London.
"[U.S.] computer terminals will be governed by U.S. regulation, because the computer terminal is located in the United States," Levin noted.
By making global speculative trading more difficult for investors, Levin and other Senate Democrats believe the artificial inflation of the price of oil will eventually fizzle.
full story:
http://money.cnn.com/2008/05/08/news/ec ... 2008050812